Credit unions, the most important source of credit for microenterprises in Latin America, reach the poor in large numbers and have great potential for expansion and growth. When donor funding and subsidies began to dry up in the mid-1980s, and competition from commercial banks intensified in the 1990s, many credit unions throughout the region found themselves facing a profound crisis. The more progressive credit unions responded to these competitive forces by developing greater financial discipline and service innovation. In facing up to this new environment, Latin American credit union movements will have to grapple with four key issues: rehabilitation, regulation and supervision, governance and consolidation. This text explores these issues and presents thinking on how credit unions can compete effectively in modern financial markets while still retaining their social mission.
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Glenn Westley is Senior Advisor in the IDB Microenterprise Unit. Brian Branch is Director of Technical Services for the World Council of Credit Unions.
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