Microfinance in Latin America and the Caribbean: How Large is the Market?
By Sergio Navajas, Luis Tejerina (12/06, MSM-135, En, Es) See also Microenterprise
In recent years, microfinance has greatly expanded the outreach of the financial system to millions of households in Latin America and the Caribbean. This expansion has taken place through a diverse set of institutions-called microfinance institutions-that are reaching an increased number of low-income households. The success experienced by these institutions has caught the attention of traditional providers of financial services, such as commercial banks, which are now entering into this market. However, there is a fundamental question that has not yet been sufficiently explored: what is the magnitude of the microfinance market in Latin America and the Caribbean? This report aims to answer this question through the use of institutional as well as household survey data. Data shows that, around 2005, the number of microfinance borrowers was about six million, with most clients (65 percent) being reached by regulated financial institutions. When we use national household surveys, we find that 4.5 million borrowing households are connected with a microenterprise (probably microfinance clients), while an aggregate number of eight million has overall access to credit in the region. This report also offers a simple and practical framework to improve measurement of access, demand and use of financial services.
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The opinions expressed herein are those of the author(s) and do not necessarily represent the official position of the Inter-American Development Bank
Last updated: 06/27/07
