Information Sharing and Microfinance in Peru
Download Document| Date Published | 2003 |
| Version | |
| Primary Author | Martin Valdivia and Jonathan Bauchet |
| Other Authors | |
| Theme | Housing Microfinance |
| Country | Peru |
Abstract
The microfinance (MF) sector has developed rapidly in developing countries over the last two decades, making credit available for many poor microentrepeneurs,although in most cases it has practically skipped the rural poor and most particularly their agricultural activities as smallholders. This microfinance revolution has generated a number of studies on the sustainability and impact of the microcredit programs. One of the issues of growing concern in countries with a large microfinance sector is the effect of the increasing competition,among MFIs and with the commercial banks, on the sustainability of the sector. Higher competition improves the access to credit for small microentrepeneurs, but may also allow them to incur in over indebtedness, if credit histories remain private between the MFIs and their borrowers. In Peru, like in many other developing countries, the MF sector has been growing significantly over the past two decades, especially in urban areas. At the same time, a risk information sharing system has been regulated by law since 1996, which allows for private providers, includes negative and positive information, but omits the unregulated microfinance sector. This study discusses the mechanisms through which the credit bureau (CB) system has affected the performance of the microfinance sector in Peru, and searches for some insights on the kind of interventions that could improve the connection in a cost efficient way. For that, we first revise the macro developments relevant for the microfinance sector and the CB system, including the recent regulatory adjustments.Then, we continue with a deeper analysis of the evolution of the two sectors in one region, the department of Cusco, which has a large MF sector, and a large agricultural sector. In Cusco, we also conducted some applied extensive interviews to a sample of credit officers and clients to receive further details on the situation of the MF sector, especially with respect to the financing of agriculture, and to the use and perception of the CB system.