Remittances and microfinance in Latin America and the Caribbean : steps forward on a long road ahead

The objective of this report consists of learning whether microfinance institutions (MFIs) are paying remittances and if so, whether they are linking remittance transfers to other financial products. Previous research on this subject has been relatively limited, yet assumptions about the organic relationship between remittances and microfinance have been made. Through this report, we aim to go one step closer in identifying patterns in this relationship. The report shows that one third of these financial, non-commercial lending and savings institutions are participating in the remittance market as payers for large money transfer operators (MTOs), and to a lesser extent are providing financial services to its remittance clients.1 Using a case study of five institutions, the report shows the varying modalities and experiences in money transfers and the stages of �bancarization" resulting from cross-sale and financial outreach. The institutions studied were MFIs in the form of credit unions or regulated MFIs: credit unions are located in Mexico (Caja Popular Mexicana, and other Cajas affiliated with L@Red de la Gente) and El Salvador (FEDECACES), while regulated MFIs operate in Mexico (AMUCSS), Nicaragua (FAMA) and Paraguay (Financiera El Comercio). (Author abstract)