This paper studies the impact of a program that provides grants for technical assistance on the interest rates and outreach of credit unions in Mexico. Credit unions financing rural borrowers received grants in different years. The study uses propensity score matching and relies additionally on the timing of the grants to identify effects. The analysis shows that the program lowered lending interest rates by up to 2.6 percentage points (from a pre-program average of 17.8 percent). This drop appears to be due to lower operating costs and better risk management, as reflected in a lower nonperforming loan ratio. The program also raised credit unions' returns on assets and significantly increased the value of their loan portfolio.
Details
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Author
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Document Date
2018/06/21
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Document Type
Policy Research Working Paper
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Report Number
WPS8483
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Volume No
1
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Total Volume(s)
1
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Country
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Region
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Disclosure Date
2018/06/21
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Disclosure Status
Disclosed
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Doc Name
Sowing the seeds for rural finance : the impact of support services for credit unions in Mexico
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Keywords
credit union; lending interest rate; small and medium enterprise; propensity score matching method; loan portfolio; development finance institution
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Citation
Bruhn,Miriam Reddy,Rekha Ruiz Ortega,Claudia
Sowing the seeds for rural finance : the impact of support services for credit unions in Mexico (English). Policy Research working paper,no. WPS 8483 Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/591351529583939227/Sowing-the-seeds-for-rural-finance-the-impact-of-support-services-for-credit-unions-in-Mexico