Tuesday, July 1, 2008
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.