Potential demand for microloans: A household-level study

Abstract

Having an inclusive financial system is an important tool foreconomic and social development. Given the lack of depth offinancial markets in emerging economies, microfinance representsa paradigm shift. It involves incorporating instrumentsinto the financial management of households that can lead toa genuine reduction in vulnerability by generating greateraccess to durable consumer goods or housing. For this reason,this article analyzed the characteristics of households excludedfrom formal financial services in the city of Bahía Blanca,Argentina, in 2021. Once identified, they were used to calculatethe potential demand for microcredits (MCs). This allows measuringthe importance of having an alternative to meet theunsatisfied demand for small-scale credit of the populationexcluded from the formal financial market. Comparing the unsatisfiedneeds with the actual supply of MCs, the results obtainedshow a considerable scope for developing MC institutions in thecity (but also in Argentina).