Further Comments on Micro-Finance in Mexico

Yesterday we blogged about a Wall Street Journal op-ed piece defending the growth of for-profit microfinance companies in Mexico.  In its most recent edition, The Economist takes a similar position.  It argues that for-profit microfinance lenders such as Mexico’s publicly traded CompartamosBanco can grow faster and so achieve greater economies of scale than their nonprofit counterparts, plus if they are successful the for-profit lenders will attract new investors to the microfinance field.  To support this last point, The Economist notes that since Compartamos started to pursue a profit, seven new regulated microfinance providers have begun to compete with it in Mexico.  Compartamos itself has provided a more detailed defense of its activities through an 11-page “Letter to Our Peers” available on its homepage.

LHM