Guide to Microfinance in Latin America

This report presents an understanding of the concept of microfinance as developed in Latin America, underscoring its unique features. It presents an overview of its recent evolution and the current state of the market. The different types of institutions offering microcredit in the region are also presented and analyzed. The regulations and practices of Latin American institutions are presented, following which the technologies and strategies utilized by MFIs are reviewed. It concludes with lessons that may be relevant for other contexts and highlights key publications and organizations related to microfinance in the region. Key lessons learned:

• Microfinance in Latin America is focused on developing profitable businesses by meeting the credit needs of entrepreneurs. This led to competition among MFIs and proliferation of institutions seeking to satisfy market demand;
• Good microfinance regulatory practices in Latin America include minimum capital requirements, strict standards for related party lending, ensuring adequate scale for efficiency, promoting competition etc.;
• Strategies implemented show that capital investments in technology are essential in order to reduce risks, but they need to be matched with proper organizational innovations that involve personnel management.