The Microfinance Sectors in Peru and in Mexico: Why have they followed different paths?

This paper explores some of the reasons that may help explain why the microfinance sectors in Peru and in Mexico have developed so differently. Whereas in Peru, this sector is characterized by financially sustainable institutions operating in a competitive environment with an efficient regulation; in Mexico, the microfinance industry is uncompetitive, regulation is poorly enforced and most of financial institutions are small and underdeveloped. We argue that these differences are partly explained by the approach taken by the authorities. Whereas in Peru microfinance related policies were designed to aid the establishment of sustainable institutions offering a range of financial services, in Mexico they were primarily concerned with the provision of loans