Peru Has Best Environment for Microfinance in Global Ranking

Wednesday, October 12, 2011

Lima, Oct. 11 (ANDINA). Peru has finished atop the Global Microscope on the Microfinance Business Environment 2011 for a third straight year, buoyed by an excellent legal framework, sophisticated regulators and a government commitment to use microfinance to expand financial access to the poor.

This annual study, prepared by The Economist Intelligence Unit (EIU), ranks the business environment for microfinance in 55 countries and provides a perspective on both country-specific and global trends.

Peru ranked first followed by Bolivia, Pakistan and Kenya, according to the 2011 ranking, which compares the microfinance sector in countries and regions across two broad categories-Regulatory Framework and Practices and the Supporting Institutional Framework.

These are complemented by an adjustment factor for political shocks and stability.

Peru deepened its strong foundations in the past year, with new rules to improve financial soundness, and with a proposed law on mobile banking, among the first in Latin America, the study said.

However, it noted that even Peru was affected by the global stresses in microfinance, as levels of non-performing loans (NPLs) rose after some borrowers took on too much debt.

Peru has one of the most sophisticated microfinance sectors in the region thanks to the effective supervisory capacity of its principal regulator, the Superintendency of Banking, Insurance, and Pension Funds, and a favorable legal framework that sets forth well-defined rules for both regulated and non-regulated microfinance institutions.

Source: Andina (link opens in a new window)