Microfinance in Latin America and the Caribbean: How Large is the Market?

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This report argues that 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? Latin American microfinance institutions have had significant success in expanding financial services to under-served populations. Progress, however, is still modest in terms of the number of people reached and the type financial service offered to low-income populations, but there I still ample room for expansion in both fronts. Furthermore, the expansion of services has not been equal among countries or even within a single country.

As a result, the report suggests that the uneven expansion of microfinance services in Latin America and the Caribbean raises a number of basic questions: What type of institutions are offering microfinance services? What is the size of the microfinance sector in each LAC country? What is the potential demand for microfinance? This report seeks to answer these questions by using data collected from microfinance institutions in 23 countries and analyzing household surveys from 12 countries.

Following a brief introduction, the report begins with a discussion on data covering the type and size of institutions offering microfinance services in the region. The third section analyses who is accessing credit and deposit services as reported by national household surveys and offers a framework to improve its measurement. Proper measurement will help key stakeholders in microfinance to better understand the limits and potential of microfinance as it has evolved in LAC. The last section compares the results of the analysis on access to financial services by low-income households using different data sources.

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