The Microfinance Experience in Latin America and the Caribbean

This report by the Inter-American Development Bank outlines the evolution of microfinance in Latin America, from the 1980s to the point that some profitable microfinance institutions seem to be performing more strongly than commercial banks, as well as addresses its effectiveness in comparison to microfinance in Asia. The distribution is considered uneven throughout the region, with better coverage in the smaller countries of Central America. Asia and Latin America seem to have comparable average costs and loan rates, though across Asia it generally seems to be lower, and deposit taking and leveraging up from capital are comparable practices, with the Latin American performance taking the lead in this instance. Another point to be emphasized is the huge share of the economy that micro- and small enterprises comprise, hovering around 40% of the share of GDP for many countries. Considering the large share of the economy that these small businesses comprise, and the need for funds to be more widely available, it is clear how microfinance is helping alleviate poverty. At the time being 5% of microenterprises throughout Latin America are receiving funding from any type of financial institution, showing that there is still lots of room for improvement in coverage.

The full report can be found at: ADBInstitute