1. Introduction
In the past two decades, microcredit became essential in Latin America. Non-governmental organizations (NGOs) were the
pioneers to operate in the sector, with the purpose of fulfilling the needs of credit offer to the low-income population. NGOs
performed a significant role in developing an alternative methodology for credit analysis, solving the lack of available
information and conventional collateral problems of those transactions by means of personal contacts made by credit agents and
interviews with borrowers. In the beginning of 1990’s, such methodology became benchmark and spread all over Latin America,
since it has been verified that, although no guarantees were offered, low-income population’s insolvency rate were equivalent to
the rate of other population segments’. Moreover, since there is financial autonomy and scale, microfinance creates businesses,
which are perfectly feasible from an economic point of view.
Nevertheless, as a result of the development of NGOs and the increase of microcredit offer in light of the entry of new
microfinancial institutions (hereinafter referred to as MIFs) in the market, all those institutions started to experience fund raising
problems. The most conventional means of fund raising, i.e., through international political bodies, such as the International
Finance Corporation (IFC), Inter-American Development Bank (IBD) and government programs were not sufficient to meet
demand. In that effect, it became vital to include those organizations in the formal financial sector as to access new fund sourcing
and to move towards self-sustainability and scale gains.
BancoSol and Caja Los Andes, both from Bolivia, Finansol from Colombia, and Financiera Calpiá from El Salvador,
(Stauffenber, 2001, Marulanda & Otero, 2005) were among the first organizations to operate as financial institutions, followed by
many other NGOs in other countries. NGOs transformations into MIFs stimulated a development process of microfinance in Latin
America in the 1990’s. In Brazil, private MIFs called Sociedade de Crédito ao Microempreendedor (hereinafter referred to as
SCMs) were established in 1999. They fulfilled fund needs and promoted the sector’s growth. In the same period, entry of
commercial banks in microcredit activities was a relevant issue for the sector.
In order to evaluate those institutions, more sophisticated tools have been implemented, such as the creation of the microfinance
rating agencies as Microrating. Since then, there has been attempts to establish standardized indicators to measure MIFs
performance as to conduct comparative studies of microfinance among several continents, which is a seriously undertaken task by
the Consultative Group to Assist the Poorest (CGAP), sponsored by the Inter-American Development Bank (IDB) and the United
States Agency for International Development (USAID) through Microrating and Planet Rating.
This work also adopts CGAP´s (2001a, 2001b) concepts.
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Convention