Microfinance in Latin America and the Caribbean: 2008 Data Update

This note summarizes the results of a recently completed IDB survey of microfinance in Latin America and the Caribbean. The survey includes information on microfinance activities in 25 countries.

Estimates for 2007 indicate that over 600 institutions serve over eight million clients and provide more than US $8.6 billion in credit. Survey findings indicate that:

• Potential demand is immense and still largely unsatisfied;
• Regulated financial institutions serve almost 70% of total volume and more than half of borrowers;
• Non-regulated institutions lend about half the average loan provided by regulated institutions;
• Business environment for microfinance presents considerable disparity;
• Small countries like Bolivia, Peru, Ecuador and El Salvador present a more favorable environment for microfinance than large countries like Argentina, Brazil and Mexico;
• Effective interest rates show great disparity among countries;
• Interest rates are influenced by country-specific economic characteristics, competitive environment, regulatory environment and institutional efficiency;
• Microfinance interest rates charge a premium of about 6% over commercial bank rates, on average.

These initial findings show that there is substantial and rapid growth in the sector, although there is enormous variation among countries.