A Primer on Legal Alternative Financial Institutions in Colombia

Mario Alejandro González Juan Camilo Iriarte

National Association of Financial Institutions (ANIF)

Abstract. The recent financial crisis has questioned the reach of financial regulation
and the existence of unregulated operators in the financial markets. Among the main
unregulated operators in Colombia are Alternative Financial Institutions, including
mainly legitimate businesses with lending schemes focused on the unbanked.
Businesses vary across the scope; some of them are public utilities providers, financial
cooperatives, retailers, Non-Governmental Organizations (NGOs), etc. These
institutions have grown considerably over the past few years: they reached over 3.7
million low-income households in 2007. However, these lending schemes are neither
regulated nor supervised. Since there are no estimates available, we measure the amount
of outstanding loans for legal alternative credit programs in Colombia and make a basic
characterization of those schemes. Then we discuss the need of adequate regulation and
supervision of such alternative institutions.
INTRODUCTION

Developing an efficient financial system is a key driver to foster growth and reduce
poverty. There is plenty of evidence proving effective linkages between growth and
financial depth. For instance, Demirgüç-Kunt and Levine (2008) explain how the access
to formal financial services determines the degree of economic opportunities in any
economy. This is a major issue in poverty reduction, since financial access and bank
operation determine who could be a successful entrepreneur or who could pay for better
education.

Recent studies measure the costs of low access to financial services, not only for those
unbanked but for the whole economy. Caskey, Ruiz and Solo (2006) analyzed the cost
of being unbanked for a medium-income household in the United States, concluding
that about 2% of annual income is spent on check cashing services. Beck, Demirgüç-
Kunt and Levine (2004) found that those countries with efficient financial systems
experienced faster declines in poverty and income inequality.

There are several barriers to access financial services, especially in emerging markets.
Thorsten Beck and Augusto de la Torre analyzed in 2006 different supply and demand
constraints, and concluded that self-exclusion is a powerful force in the banking market.
Most of bankable population have deficient financial education and are deterred by the
high price of financial services. Honohan (2005) highlights two binding restrictions: the
price barriers, which include the price charged by the service provider, technical
efficiency, regulatory and tax factors and competition (or lack of it); and information
barriers, when adverse selection cannot be properly mitigated.

There are different mechanisms to overcome these constraints. Arbeláez, García and
Sandoval (2007) emphasize the role of non-credit institutions in lending to bankable
population. Citing Besley (2005), they underscore the role of non-market banks (most
of them from the real sector) as a potential alternative to abate market failures in the
credit market (particularly adverse selection). One of the most interesting results of their
paper is that those holding loans from such institutions have a higher likelihood of
getting banked.
On the other hand, Colombia undertook a deep overhaul of its financial system
throughout the decade. In the second half of the nineties several institutions went into
bankruptcy while others were nationalized to preserve public savings. The financial
meltdown was the result of poor lending policies and critical economic conditions
following the Asian crisis of 1997. Financial depth measured as outstanding credit as a
percentage of GDP displayed a sudden slowdown from 41% in 1997 to barely 21% in
2004.

The hard credit crunch took its toll on those most vulnerable. Poverty hiked to almost
60% and the inequality Gini index reached 0.6 in 2000, among the highest of the world.
Banks managed to stabilize their balance sheet after 2002 and economic conditions
outperformed since then. Even though these social measures have declined since 2002,
they are still high (46% of population is considered poor and Gini index reached 0.59 by
2008), while financial depth still does not attain its levels of the nineties (28% by 2008).

Nowadays, the Colombian financial sector is a healthy industry. It is composed by two

main subsectors: the banking (or intermediated) industry and the securities (or non-
intermediated) market. Banks account for the largest share of financial system’s assets.
By the end of 2008, credit institutions held assets for US$96 billion, half of the financial
system’s assets. Credit flows in Colombia are normal despite the world’s current
financial crisis. Outstanding credit grew 7.4% in real terms in April 2009; while
Commercial and Industrial credits were the most dynamic debts, growing 11.4% real.

However, the vast majority of Colombians are outside the banking system. A recent
study of the World Bank (Manroth and Solo, 2006) showed that in Bogota, Colombia’s
capital and most developed city, 40% of the population lacks any relation with formal
banking. The high unbanked percentage is explained by the high cost of being banked,
deficiencies in financial education and a general distrust towards banks. Those
unbanked, especially among low-income population, prefer to save on informal
institutions, such as “natilleras” or communal savings, and ask for loans to friends and
relatives.

Alternative financial institutions (AFI) focus on lending to low-income households and,

to reach them, make special emphasis on the adequate credit instruments the poor need
and the payment plan they can afford. Alternative instruments and institutions are then
filling the void left by the formal financial system. Some of them are traditional “loan
sharks” or predatory lenders, who charge extremely high interest rates (to 10% per
month) and are mostly informal. However, other alternative financial services providers
charge lower rates and give more flexible and overall better conditions. Among formal
institutions are public utilities providers, cooperatives, Non-Governmental
Organizations (NGOs) and quasi-public entities known as “Cofamiliares”. By 2007,
41.3% of Colombian households held debts with these institutions, accounting for more
than US$3.4 billion - about 1.6% of GDP (MIDAS, 2007).

Some power and natural gas distribution companies lend to their costumers and ask the
repayment through the electric or gas bill. Since they are not allowed to take deposits,
they borrow from the financial system and from foreign sources to backup their credit
programs. NGOs face a similar constraint, but they fund themselves either by donations
or subsidized loans from multilateral institutions, large banks or big businesses.

Regarding asset and liabilities mismatches, AFIs face liquidity preferences. Holding
minimum amounts of cash will maximize profits but disregards maturing obligations,
growth funding and the ability to operate during an unexpected liquidity disruption.
Minimum “Idle Cash” raises the risk of becoming illiquid that will quickly lead to
bankruptcy as there is no lender of last resort for non-banking institutions.

Alternative creditors are certainly more exposed to interest rate risk than banks because
the type of loans they provide are priced according to what the market will bear since
most of the clients are low-income households which cannot afford higher interests
rates. AFIs are then unable to charge clients for higher funding costs, therefore creditors
must bear those costs.

Finally, low interest resources in foreign currencies attract AFIs. When assets are
denominated on local currency and liabilities are denominated in both local and foreign
currencies, AFIs face exchange-rate risk. If local currency depreciates, foreign
denominated liabilities cost in domestic currency will raise.
Profit maximization may lead to excessive risk taking, making AFIs more vulnerable to
unexpected shocks than traditional financial institutions. This is a major source of
concern, since AFIs provide financial services to the most vulnerable population.
Another matter is the AFIs interconnections with the financial system. The growing
interconnection between supervised financial institutions and non-supervised AFIs
could pose a threat. As AFIs become mayor players, their eventual bankruptcy
materializes a systemic risk.

The figures regarding AFIs show that Colombia still has a long way to go to develop an
efficient financial system. Three research papers have assessed the size of the informal
financial services to low-income Colombians, analyzing it from different perspectives.
Solo and Manroth (2006) were the first to question why there is so low credit
availability for low-income households and found several disadvantages common for
the unbanked. MIDAS (2007) made a survey to measure the extent of informal credit to
households and microbusinesses. And Arbeláez, García and Sandoval (2007) analyzed
the credit program of Codensa, the electric utility provider of Cundinamarca region. The
three of them outline the importance of alternative credit in the country.

Alternative consumer credit has grown substantially, and new risks have emerged.
When principal and interest payments are insufficient to expand their portfolio, these
institutions may require new funding to place new loans. AFIs then turn to non-grant
funds, where liability management becomes an issue. This poses a regulatory challenge:
if these institutions are deeply interconnected with the financial system and neglect the
management of their liabilities, any sudden increase in credit delinquencies might have
a systemic effect. Traditional funding brings traditional financial risks: balance sheet
risk, maturity risk, currency mismatches and interest rate risk. Colombian institutions
are reaching this stage, where NGOs have issued debt securities and some utilities
providers are listed in the local securities market.

The materialization of those risks during the current world financial crisis shows the
need to supervise the entire scope of financial services in an economy. The rise of the
so-called “shadow financial system” was the result of a lax monetary policy and the
capability of securitize credits and mortgages. Investment banks bought securitized
mortgages through off-balance-sheet vehicles to avoid regulations, and leveraged those
vehicles with overnight repos. Since there were a huge maturity mismatch between
assets and liabilities, the increase in delinquencies led to the realization of a funding
liquidity risk and the insolvency of several institutions throughout the world
(Brunnermeier, 2009).

Even though Colombia has proper regulation to address potential lending risks,
regulations concerning alternative financial services are sparse and in some cases
nonexistent. For example, public utilities operation, rates and prices are closely
supervised; however their credit programs are not. Adequate supervision is needed to
avoid any messy deleveraging as those occurred in the United States and Europe during
2007-2009.

In this paper we want to shed some light on the issue of alternative financial services.
We want to measure the size of this parallel system for Colombia and to analyze the
regulation underlying it. The alternative financial system allows access to formal
financial services for those unbanked so that they may enjoy opportunities of social
mobility. A proper regulation and measurement of this market should enhance its
purpose. Finally, we propose some alternatives to avoid potential negative outcomes of
poor lending policies or debt overhangs.

The next section deals with the Colombian case, assessing the regulation and making a
gross measure of legal alternative financial services; section three addresses some
regulation and supervision issues and implications; and, finally, in section five, we offer
some concluding remarks.

THE AGENTS INVOLVED IN NON-BANKING CONSUMER FINANCING

Several institutions are involved in the business of financing consumption in Colombia.

The credit providers to households range from banks and financial institutions to pawn
shops. There are very few works in the literature that intend to measure this market,
even more given the nature of such a business. The most complete measurement of
informal credit is the Midas (2007) survey: Colombian Informal Credit Market Survey,
made through interviews to low-income households throught he country.
A sample of 1.200 households was stochastically drawn from strata 1, 2 and 3 of sixteen
villages (rural towns) and cities (urban towns). The households chosen represent about
seven million families, 15% of them from stratum 1 (the lowest income families), 29%
from stratum 2 and 17% from stratum 3. 90% of the interviewees have had credits at
some point of their lives. But almost everyone (83%) has borrowed, at least once, from
relatives, neighbors and friends. About 53% still holds a credit from an informal source
(relatives, neighbors, friends, pawn shops and predatory lenders).

The size of the consumer credit changes across the table. When defining Alternative
Financial Institutions as the sum of outstanding credit from retail stores, Cofamiliares,
NGOs and cooperatives, they hold a grater proportion of loans from stratum 2. About
70.7% of the households from stratum 3 have asked AFIs for a credit. This is consistent
with the profile of the household with real estate but without access to the banking
system. This credit outweighs that asked to informal sources, which accounts for less
than 69% of the answers.

Figure 1: Midas Survey: Have you ever use this type of credit provider?

Informal
80% Informal AFI 76.2%
Informal
70.8% 70.7%
68.8% AFI
70%
64.6%
AFI
60% 55.7%

50%

40% Banks
Banks
29.6% 31.2%
Banks
30%
24.7%

20%

10%

0%
Stratum 1 Stratum 2 Stratum 3

Source: Midas (2007) survey and Anif

The data from strata 1 and 3 tells us that most of the Colombian households prefer
borrowing from informal sources, mostly to friends, relatives and neighbors. Banks are
not the most popular credit source: only 29.7% of households in stratum 1, 24.7% of
stratum 2 and 31.2% of stratum 3 have sought credit from financial institutions. This
shows how far the financial system from low-income households is. Even though, these
strata hold credits with the financial system that accounts fore more than US$3.500
million, about 1.7% of the GDP.

However, this measurement has the traditional problems arising from surveys. People
might not tell the truth and damage the scope of the results. We then proceed to make a
measurement of AFIs according to its source. First of all, we make an analysis of the
larger public utilities providers that have credit programs: Codensa (in the
Cundinamarca region) and Promigás (Cali and the Caribbean Basin). Second, we assess
the credits made through Non-Governmental Organizations (NGOs); third, we analyze
the Cajas de Compensación Familiar (Cofamiliares); and, finally, we make the case for
cooperatives, perhaps the only AFI to be correctly addressed by regulation and
supervision.

Codensa

Codensa holds 20% of the power retail market in Colombia, including all the region of
Bogota and its surroundings (Cundinamarca Department). The Company’s operational
income rose past US$1 billion last year and total earnings reached US$217.4 million.
The company serves a market of more than 2.200.000 clients out of which over two
million are residential costumers. Much of them are potential candidates of the “Easy
credit for all” (Crédito Fácil para Todos) finance program.

This description of Codensa’s lending program is broadly based in Arbeláez, García and
Sandoval (2007). Codensa launched their credit scheme in 2001 with just a few hundred
costumers, yet by 2006 the program had grown substantially, attaining over 250.000
clients. Since 2006, Codensa then offered credit cards to purchase the same items at the
same dealers without credit approval for every purchase. By February 2008, over
550.000 customers held credit cards from Codensa. Considering that the Colombian
financial system has just fewer than five million credit card users, Codensa became a
mayor credit card provider in the country.

The program is pitched as a social responsibility program, as loans to the unbanked

poor. It has three goals: i) to build a new business line for Codensa; ii) to deepen
customer loyalty; and iii) it is intended for low-income and non-banked households. The
lending business diverges substantialy from power retail, and it is effectively a new
business line. Low-income and unbanked households can easily apply for a loan, they
only need a letter from their employer stating the employee’s seniority and wage and the
last paid electricity bill.

The program has a defined demography, aiming to reach unbanked and poor
households. Only 3% of the loans belong to strata 4, 5, and 6 (middle and high income
households). Most clients come from stratum 2, attaining 51%, while 11% belongs to
the lowest stratum, 40% of them officially defined as poor. Youngsters are the main
clients of the program: only 25% of the borrowers were over 45 years old. When
analyzing the level of education, 71% of the borrowers attained a high school diploma.
Codensa’s goals are then being achieved as they have expanded Easy Credit for All to
very low-income households.

Condesa Hogar, the credit program’s managing office, has modified the product over
time. When Easy Credit for All was launched in 2001 it consisted on loans for electric
appliances of certain brands at limited amount dealers. As we mentioned above,
nowadays Codensa issues credit cards that can be used at specific locations, allowing
the company to widen the number of retail partners where customers might use their
cards, a strategy that has proven successful to foster competition and reduce prices. The
amount of borrowers has greatly increased from 300 clients in 2001 to over 730.000 in
2008.
 Figure 2: Codensa: Outlays vs. Customers

350 800,000
730.000

700,000
300

Disbursments
600,000
250

500,000
200

Customers
USD MM

445.293
400,000
150
Customers 300,000

100
200,000

50
100,000

0 0
2001 2002 2003 2004 2005 2006 2007 2008

Source: Condensa yearly memoir 2008, Arbeláez, García and Sandoval (2007) and Anif

During 2001-2008 credit outlays expanded exponentially, from US$126 .000 to US$198
millions. By December of 2008, Codensa had a total of US$334 million in outstanding
loans with an average interest rate of 32.3%. The success of the program can be
explained by the synergy between loans and Codensa’s billing scheme: loan
amortization and the power retail service are charged in the same bill and could be paid
simultaneously1.

Codensa has virtually no information costs, contrary to banks: since there is no

regulation on that matter, the company is not required to build a credit profile on
borrowers. The power retailer has further advantages as it faces lower regulatory costs
(no minimum capital, or liquidity requirements) and the loan payments can be plunked
down at some lottery stands or in banks without higher fees.

1
In a recent statement from the Public Utilities Superintendency (as of 18th August 2009), public utilities
were compelled to dismiss credits payments within the bill unless the customer agrees with it.
The main features of Codensa’s loan program are: i) in the beginning, customers could
only purchase electric appliances, but the range widened to cover different appliances
and house improvement materials; ii) items purchased by different strata vary
substantially: while higher strata families buy refrigerators and computers, lower-
income households acquire TV or entertainment sets.

Figure 3. Codensa: items purchased by stratum as % of amount purchased

30%

Low Quality Computers

Television Sets
25%
Product Percentage

20% Entertainment

15% refrigerators

10%

5%
1 2 3 4 5 6
Stratum

Source: Arbeláez, García and Sandoval (2007) and Anif

Although small credits ability to reduce poverty is questionable at best, specially if used
to acquire electric appliances, Codensa’s consumer credit program has had a positive
impact. According to Arbeláez, García and Sandoval (2007), Codensa reports the
customers profile to Datacrédito, a credit bureau, allowing unbanked clients to build a
credit history. When customers develop some credit history, it becomes easier for them
to borrow from banks. Actually, 45% of Easy Credit for All borrowers were granted
additional credit lines. Codensa’s consumer finance has had a positive effect in
deepening the financial system.
There are some distinctive features of the Easy Credit for All clients’ profile. First of
all, there is a great amount of credit holders that are also homeowners, allowing them to
collateralize and have better loan conditions. Second, they are younger, 84% of them are
employed and hold high school diplomas. Perhaps the only restriction for a young and
educated homeowner that currently has a formal job is the lack of financial history, all
of which Easy Credit for All mends quite well.

Figure 4: Codensa’s Unbanked Client Portfolio

Banked 44%

Unbanked
66%

Source: Arbeláez, García and Sandoval (2007) and Anif

The program may promote banking to the unbanked, but there are sources of concern.
Current economic downturn has taken its toll on consumer loans quality, which have
deteriorated somewhat. Codensa’s last annual memoir (Memoria Anual Codensa 2008)
states that “consumer credits have been less positive and default reached 6.29%”. No
further information is published by the company. However, we know from supervised
financial institutions that consumer loans have deteriorated over 2008 and the first
months of 2009 (Financial Superintendency, 2009).

As we mentioned above, the social impact of Easy Credit for All program is remarkable.
If the program proves to be unreliable or if collapses, it may deter almost half a million
citizens from becoming banked. Since deep financial systems are a key driver of
development and long term growth, Codensa’s consumer finance business stability
influences on the future development of the national financial system.

Prior to 2008, Codensa’s loan performance was impressive: default reached only 1.7%
in and 1.6% for 2006 and 2007. Although the growth in impaired credits in 2008 is
mostly explained by poor economic performance, the lending scheme is still a profitable
business.

Figure 5: Codensa: Outstanding loans vs. Default

350 7,0%
335
330 6,3%
6,0%
310
297

290 5,0%

270

Default (%)
4,0%
USD MM

250
3,0%
230
212
210 1,7% 2,0%
1,6%
190
1,0%
170

150 0,0%
2006 2007 2008

Source: Codensa yearly memoir 2008 and Anif

Besides from the national economy’s underperformance, higher default rates may be
explained by the accelerated expansion of Codensa’s loans. Both in 2006 and 2007
loans grew faster than clients, so debt overhangs rose just before the downturn. It might
be possible that Easy Credit for All outgrew the company’s expectations and control, as
they have placed over half a million credit cards in the market. Codensa hired
investment bank BNP Paribas Securities Corporation to value and sell the loans,
determining a minimum price of $601.000 million pesos and a private equity fund
managed by Colpatria (a Colombian bank) acquired it in November 2009. By selling
Easy Credit for All loans, Codensa effectively removed approximately 10% of its assets.

Currently, Codensa’s operations are regulated by the Energy and Gas Regulation
Commission (CREG) and supervised by the Public Utilities Superintendency
(Superintendencia de Servicios Públicos Domiciliarios). These two institutions are
focused towards adequate power supply, price, competition and operation standards.
Neither the CREG nor the Superintendency has the knowledge or purpose to regulate or
supervise a consumer finance program. Under the current institutional array, it is up to
the Financial Superintendency (Superintendencia Financiera), the Colombian top
financial authority, to regulate and supervise only deposit-taking institutions. Since
Codensa does not take deposits, Easy Credit for All falls into a loophole.

In addition, the company is deeply integrated with the financial system. Recently, it
issued US$135 million in bonds for the third time. Two of the bonds were interest-rate
indexed bonds with agreed maturities up to 2 and 5 years, and a third one inflation-
indexed with agreed maturity longer than five years. Right now, Codensa has
outstanding bonds with a market value of more than US$710 million to finance not only
its consumer finance program but also its power retail business. If credits keep losing
quality, it will impair Codensa’s balance sheet and credit rating. This could damage
Codensa’s capital raising ability, threatening the consumer finance program.

Codensa’s consumer credit program size, in 2008, is equivalent to 2% of the financial

system’s consumer loans. If Codensa’s outstanding loans’ quality strongly deteriorates
or suffers a sharp contraction, it could deploy a credit crunch for the low-income
households and threats financial stability. Easy Credit for All has grown to such an
extent that it now poses systemic risk to the capital markets and to the customers. The
deepest concern comes from the program’s ability to promote financial services to the
unbanked. The social cost of a mishap in the lending program might be larger than in
any bank; Codensa is financing almost half a million households that could not have
alternative financial options. This means that, despite its loans performance, Codensa
should be required by regulation to provide the market with accurate and up-to-date
information to calculate households’ indebtedness and credit demand.
Promigás

Promigás is a natural gas transportation company that manages a gas pipeline between
the Ballenas well (located close to the Venezuelan border) and the town of Montelíbano,
in northwestern Colombia. It also holds controlling stakes at three gas retail companies:
Surtigás, Gascaribe and Gases de Occidente, which provides service to customers in the
Caribbean Coast region and in the Valle del Cauca Department, at southwestern
Colombia. Currently, Promigás natural gas retail business has over 1.5 million clients in
cities like Cali and Barranquilla.

As part of its social responsibility plan, Promigás designed the Brilla program to
provide credit to the unbanked poor. By June 2008, the Brilla program lent more than
US$100 million to purchase gas appliances and computers and to make house
improvements. As the program designed by Codensa in Bogotá and Cundinamarca,
Promigás intends to prop up customer loyalty and to build a profitable new business
line.

Figure 6: Promigás: Outlays vs. New Customers

6 16,000
Millions

14,000
5

12,000

4
New Costomers

10,000

3 2.7 8,000

7,391
6,000
2

4,000

1
2,000

0 0
Jun-08 Jul-08 Ago-08 Sep-08 Oct-08 Nov-08 Dic-08 Ene-09 Feb-09 Mar-09 Abr-09 May-09 Jun-09

Source: Promigás

The Brilla program started in December of 2006 and by June of 2009 it served 313.500
clients, 45% of them in Cali and its surroundings and the remaining 55% in the
Caribbean basin. Between December of 2006 and June of 2009 Promigás lent an
average of US$334 per client, but the loan size was larger in Cali (US$389.5 per client)
than in the Caribbean basin (US$294.8 per client). In 2009 the Brilla program accounted
for sales of more than US$13 million, concentrated in financing house improvement
materials (about 60% of the loan portfolio).

When analyzing the socioeconomic composition of the loan portfolio, almost half of the
credits are concentrated in stratum 2 (42%). Stratum 3 accounts for 26% of the portfolio
and stratum 1 for 24%. However, this arrangement diverges when taking into account
the region. In Cali and its surroundings stratum 3 reaches 38% and stratum 1 has only
11% of the credit outstanding. In the Caribbean Coast stratum 1 came to 35%, while
stratum 3 has 16%.

Figure 7: Promigás Credit Program Strata Composition

50%
Stratum 2 46,0%
45% 42,4% 42,6%
40,5%
40% 37,7%
36,1%
35% 33,3%
Stratum 3
30% Stratum 1 26,0%
23,8%
25%
20% 18,6%

15% 13,5%
10,6%
10%

5%

0%
Total Surtigás Occidente Caribe

Source: Promigás and Anif

One of the most striking features of Brilla is the excellent quality of the portfolio. Credit
delinquencies, measured as non-paid bills after 90 days, reached 1.2% of total loans.
Non-performing loans were especially higher in Cali and its surroundings, attaining
barely 2.4%. This is a meaningful outcome when compared with banks, whose
delinquencies were in 4.7% by May. Despite being an expensive financing method
(with amortization schedules reaching up to 60 months), customers are loyal to
Promigás and pay their bills timely.
 Figure 8: Promigás Default Rates

2.5% 2.4%

2.0%

1.5%
1.2%

1.0%

0.5%
0.5% 0.4%

0.0%
Total Occidente Surtigás Caribe

Source: Promigás and Anif

The Public Utilities Superintendency supervises Promigás, but the regulating matters
are restricted to those related to the gas transportation and distribution service. The
consumer finance program is not regulated nor supervised by any government agency,
which poses the question of financial stability, since the company holds financial debt
for 22% of its assets (about US$263 million). However, the loan portfolio maintains its
quality even though the economy goes through a recession (growing -0.6% year-on-year
in the last quarter of 2008 and -1% in the first quarter of 2009). Until now, the Brilla
program is well managed and currently does not pose a threat to financial stability.

Non-Governmental Organizations (NGOs)

Microfinance NGOs have become relevant players in the Colombian credit market.
NGOs’ outstanding microloans by June 2009 reached US$ 546 million. There are two
types of NGO lenders: regulated microfinance institutions and unregulated microfinance
institutions (UMFIs). Regulated institutions are supervised by the Financial
Superintendency (Superintendecia Financiera - SF) and unregulated institutions have
neither minimum capital nor provisions requirements. Disclosure is also minimal.

Since March 2008 micro-lending in Colombia has two guidelines: it is awarded to small
and medium size enterprises (Pyme - SMEs) and the loan value must be equivalent or
less than 120 monthly legal minimum wages (MLMW - roughly US$30.000). Before
March 2008 the highest amount that could be borrowed as microcredit was only 25
MLMW, equivalent to US$550.

On October 2008 two NGOs, CMM Medellín and CMM Colombia, merged as a
financial institution and began to operate as Bancamía, a microfinance regulated bank
capitalized by the Spanish bank Banco Bilbao Vizcaya Argentaria (BBVA). Prior to the
merger, all the microfinance NGOs in Colombia were not regulated.

Microfinance suffered a mayor overhaul during 2008, as described above. Mergers and
Acquisitions and regulation reshaped the market. Bank’s microloans outlays soared
since April 2008 as these entities took advantage of the new regulation. In addition, the
described mergers shifted the trend in outstanding credits as regulated institutions have
outgrown unregulated lenders since September 2008.

In January 2008, regulated lenders held outstanding loans for US$1.7 billion and, by
September 2008, they had grown nearly $200 million, reaching just under US$2 billion.
The increase shows just how dynamic this market is. Microcredit growth on 2008 is far
greater than on 2007 and 2006. Unregulated lenders held a total amount of outstanding
loans of US$1.4 billion. Nine months before, loans amounted just to US$ 1.2 billions.
During the first nine months of 2007 microcredit grew by US$ 480 millions, 60% of
which was issued by unregulated institutions. On the same period of 2008, microloans
grew over US$273 million, out of which unregulated lenders only provided 36%
(Emprender, 2008).

As we mentioned above, regulated institutions have taken advantage of the new

regulation and have been able to expand their micro-lending schemes. In fact, just over
5 million Colombians were awarded some sort of credit in 2008 from supervised
providers (Asobancaria, 2008). In spite of supervised loans growth, prior concerns on
the matter of non-regulated institutions are not solved: unregulated agents have served
nearly 900.000 customers, about 15% of banking entities creditors.

Unregulated institutions diverge substantially across the table; some are award winning
institutions, such as the Women’s World Banking Foundation at Cali (WWB Cali),
Colombia’s largest microfinance NGO. But others are small and almost undetectable.
WWB Cali currently discloses its financial statements on a monthly basis and has issued
corporate bonds in the local stock market. Aside from WWB Cali, Fundación Mundo
Mujer Bucaramanga (FMMB) and Popayán (FMMP), disclose their data and have credit
risk models. In the rest of the industry, disclosure is minimal as information is either
inexistent or out-of-date.

Figure 9: Microfinance NGOs Outlays

1,000
Millions

900
Total
800

700

600
546
500
480
3 Largest
400

300
Nov-08
Jun-08

Jan-09

Jun-09
Jul-08

Feb-09

Mar-09

Apr-09
Aug-08

Sep-08

Dec-08

May-09
Oct-08

Source: Emprender Cooperative and Anif

As economic downturn sat in, loan delinquencies grew quite considerably. Between
December 2007 and September 2008, UMFIs’ delinquencies grew from an incredibly
low 1.97% to 3.48%. Even though in the aggregate figures unregulated institutions
outperform the larger (and regulated) providers (7.53%), disaggregated data tells a
different story.

WWB Cali, FMMB and FMMP are the largest unregulated microcredit providers and
have an outstanding performance, both measured in low default and excellent
provisions. However, smaller microfinance NGOs have poor performance: Fundación
Amanecer’s default reached 14.8% on September 2008 and Fundación Santodomingo,
which has a joint venture with Acción (the international microfinance corporation), has
considerable higher delinquencies of roughly 7%.

There is substantial difference between larger and smaller NGOs operating in the
segment. On average, in 2009 default rates of small UMFIs reached 9.0%, but the
largest UMFIs default is just over 3.6%. Furthermore, smaller UMFIs non-performing
loans rates are much more volatile than their larger counterparts: the largest monthly
variation for small operators was 553 basis points, while large NGOs’ default most
considerable change was just 7 basis points.

Figure 10: Microfinance NGOs Default Rates

14%

Others
12%

10%
9.3%

8%

6%

3 Largest
4%
3.4%

2%
Jul-08

Nov-08

May-09
Jun-08

Jan-09

Jun-09
Mar-09
Oct-08

Apr-09
Aug-08

Sep-08

Dec-08

Feb-09

Source: Emprender Cooperative and Anif

On aggregate, NGOs provisions to delinquent loans outperformed to those of regulated

institutions, as their provisions-to-default ratio were 125% and banks’ ratio only
reached 60.2% as of June 2009. Although regulated micro-lenders have low ratios, their
provisions have grown considerably during between November 2008 and June 2009,
and now they have reached 70%. If this trend holds, they should reach 100% in the
medium term. Even though larger NGOs have proper risk-hedging (WWB Cali
provisions-to-default ratio is over 200%), smaller NGOs show low levels of provisions.
For example, in September 2008 Cofincafé had provisions for a mere 20% of their
delinquencies, and there are other similar figures: Ingenio Castilla, 25.9%;
Microempresa Antioquia, 28.2%; Congente, 37.7%. They have not published any
additional data.

The three largest micro-lending NGOs account for 88% of the unregulated microloans
on June 2009. Combined, they serve over half a million costumers. If supervisors
extend their scope over these AFIs, most of the microfinance NGOs credits and their
problems could be accounted with minimal expenses as the smaller UMFIs only serve
73.000 Colombians.

Figure 11: Microfinance NGOs Outstanding Loans vs. Customers

1,000 1,000

900 Customers
900

800 Total
800
Thousands of customers

700 643

700

USD MM
600

500
600
546
400
480 500
300
3 Largest
400
200

100 300
Jun-08

Jun-09
Oct-08
Jul-08

Aug-08

Nov-08

May-09
Jan-09

Feb-09

Mar-09

Apr-09
Sep-08

Dec-08

Source: Emprender Cooperative and Anif

Although UMFIs outstanding loans are relatively small when compared with other
agents in the financial system, they do reach a significant number of people, especially
low-income households. NGOs have a mayor roll in the national unbanked effort,
frequently, they are the only providers in isolated towns. If a UMFI fails, the local credit
crunch over an already vulnerable population might trigger a social crisis. In addition, it
would deter unbanked Colombians from becoming banked, further slowing the
expansion of the national financial system.

Cofamiliares

The Colombian scheme of social protection is based on payroll taxes known as

“parafiscales” (pure tax components of the payroll). The purpose of these taxes is to
bring affordable services to those workers who cannot reach them. There are three main
parts of parafiscales: i) child-support programs (ICBF), representing 3% of the payroll;
ii) labor-training programs (SENA), representing 2% of the payroll; and iii) the Cajas
de Compensación Familiar, which are quasi-public entities devoted to protect
vulnerable workers.

The Legislative Decree 118 of 1957 created the Colombian Familiar Allowance System,
founding the Cajas de Compensación Familiar (Cofamiliares) as the institution in
charge to deliver it. The initial purpose of such institutions is to provide money
subsidies to poor workers. With this target in mind, business must pay 4% of the payroll
of all their formal workers and Cofamiliares redistribute that money among those
workers earning less than US$500 a month.

The 21st Act of 1982 regulated Familiar Allowance as a social expenditure payable in
money, specie and service, given to vulnerable families to relieve their financial
burdens. Twenty years later, the 789th Act of 2002 gave them broad power to deal with
social protection, including micro-lending programs and unemployment benefits. Since
then, Cofamiliares are deeply involved in several activities, becoming larger and deeply
involved with the financial and real sectors.

The successive laws modifying Cofamiliares goals have allowed them to distribute the
available resources through money or services, including recreation, retail, student
loans, mortgages and unemployment benefits. They can act as banking institutions with
their affiliates, hold vacation centers (including travel agencies), be health care insurers,
participate in housing projects, promote enterprises, etc. This extensive array of tasks
are barely regulated and supervised by the Superintendencia de Subsidio Familiar
(Familiar Allowance Superintendency – FASI).

Even though their rough objectives have kept stalled, one of the laws gave them powers
to act as banks with their affiliates. The 920th Act of 2004 allowed Cofamiliares to
provide financial services to businesses, retirees, workers and jobless affiliates. They
may act as deposit-taking institutions, offering savings deposits and savings programs.
They can also be credit providers: they are allowed to originate mortgages (especially to
low-income households), consumer loans and corporate loans.

Cofamiliares have a record of involving large resources to their credit programs through
specialized purpose vehicles (not included in the balance sheet). According to the latest
data available (2008), Cofamiliares hold outstanding loans for US$376 million. The
number of credits reached more than 604.000 in 2008, a reduction from 2007 (667.000).
This means that Cofamiliares are lending more to less people, a bias observed since
2005 just after the enactment of the 920th Act.

Figure 12: Cofiamiliares Outlays vs. Customers

400 3.0

350
2.5
300
Millions of customers

2.0
250
Millions

200 1.5

150
1.0
100
0.5
50

0 0.0
2002 2003 2004 2005 2006 2007 2008

Source: Familiar Allowance Superintendency and Anif

Even though the 920th Act gave the Financial Superintendency powers to supervise
Cofamiliares, the lack of proper regulation from the government (through a decree) has
kept the FSI out from Cofamiliares (Concept 2005062429-001 of 17th February of
2006). Apart from the outstanding loans, there are not more statistics available. It is
impossible to track down the quality of the loan portfolio: there are not enough data
describing the loans’ ratings or the value of non-performing loans. Different from the
results they must report to FASI, they do not disclose any other data and their
operations remain obscure.

The fundamental question is how interconnected they are with the financial system and
if a failure of Cofamiliares may materialize a systemic risk. They take deposits and must
comply with the rules of the Financial Superintendency, but the loopholes allow them to
go unsupervised. Since the credit programs are kept outside the balance sheet through
special purpose vehicles, over-leveraging is an underlying risk that might affect
Cofamiliares and convey to the rest of the financial system.

When reporting to FASI, the data lacks of transparency, measurement unity and
accuracy. The different types of credit are classified according to their purpose and the
remaining is assorted as “other”. However, this category includes the 65.8% of
outstanding loans in 2006, the 57.8% in 2007 and the 49.4% in 2008. This indicates that
something has to be done to measure the risk contained in Cofamiliares loan portfolio
and Financial Superintendency needs to supervise Cofamiliares policies to avoid
damages to public trust. They must also affiliate to the National Deposit Insurance
Corporation to keep their deposits insured in case of a bankruptcy.

Cooperatives

Since 1963, Colombian cooperatives were enabled to take deposits from their associates
when a special legal figure was created: the Savings and Credit Cooperatives
(Coperativas de ahorro y crédito - SCC). SCC grew to such an extent that any failure
would have reduced public savings and eventually derail the financial system.
Regulators responded to this during the financial crisis of 1982, creating the Financial
Cooperatives (Cooperativas financieras), regulated by the Financial Superintendency
(FS) and designed to preserve public savings. Cooperatives must hold more than
US$1.2 million to be considered a FC, otherwise, the will be a SCC.
While the larger FCs were regulated by the banking authorities, small SCCs remained
unregulated and unsupervised. The 1998 financial crisis had a devastating effect on
SCCs: before the breakdown, there were 1.500 SCCs; in the aftermath, only 150
survived. Cooperative banks, a figured that allowed some big cooperatives to be treated
as banks, also failed. During 1997-1998, supervisors took over and merged four of them
to create a traditional bank. The new bank had renewed access to credit from the Central
Bank of Colombia (Banco de la República).

The regulation of Cooperatives followed a different path from that of banks. In 2001 the
government created the Superintendence of Economic Solidarity (Superintendencia de
Economía Solidaria-SSE) to regulate and supervise cooperatives. However, SSE
seemed to take action only when a breakdown was on the verge. The pattern changed
when they enacted the Resolution 004 of 2008, establishing a credit risk management
system. This system loosely follows Basel’s principals, as full risk identification and
monitoring must be done. Currently, the SES’ actions lag behind the FS, as the later has
followed Basel principals for several years.

In addition, to prevent further crisis the Colombian government created a fund to insure
cooperative savings, the Fondo de Garantías de Instituciones Cooperativas – Fogacoop.
The fund guarantees deposits in FCs and SCCs and mimics the goals of the Financial
Institutions Deposit Insurance (Fogafin), created during the 1982 crisis to deal with
banks. The financial cooperative system was reformed during 1998-2000 and its safety
net now is quite similar to that of traditional banking. Cooperatives are now a healthy
industry and it has expanded in size and numbers since the 1998 breakdown.
Furthermore, SCCs are properly regulated and supervised and deposits now have a
safety net as Fogacoop offers explicit deposit insurance.

Cooperatives have had an extraordinary performance as their loans have grown

substantially since 2002. The amount of outstanding loans granted by cooperatives grew
by US$ 944 millions between December 2002 and September 2009. SCCs have an
equivalent to 7.8% of the outstanding loans of the banking system and have 1.4 million
associates. Traditional banking institutions serve to approximately 3.5 million people
(Asobancaria, 2009). Even though default data is only reported since December 2008, it
is considerably lower for cooperatives than for traditional banks. Traditional banks face
default rates as high as 8.1% in March 2009, while cooperatives’ default rate was 4.1%,
clearly overperforming financial institutions.

Figure 13: Cooperatives Outstanding Loans

1.800 6,5%
Outstanding
USD MM

1.600 Loans

1.400
6,0%
1.200

1.000
5,5%
800

600
Default
5,0%
400

200

0 4,5%
Dic-08 Mar-09 Jun-09 Sep-09

Source: Superintendence of Economic Solidarity and Anif

However, loan provisioning is currently insufficient: the provisions-to-non-performing

loans ratio is 55%. Non-performing loans will then reduce cooperatives capital in 2009.
SCCs that are unable to have the minimum capital requirements will be seized by the
SES. Although by now there is enough liquidity in the market to meet capital
requirements, interest rates are expected to rise in late 2010.

High interest rates are especially dangerous for cooperatives, as they tend to have sticky
interest rates. According to Confecoop (the cooperatives’ union), SCCs have a lagged
reaction to changes in the official banking interest rate. As rates hike, cooperatives have
difficulties to fund themselves until their asset rates reach adequate levels.

Cooperatives are clustered by departments in a similar way as formal banking

institutions. Antioquia, Valle de Cauca and Santander have mayor cities: Medellin, Cali
and Bucaramanga respectively. These departments along with Bogotá hold the largest
amount of credit providers (cooperatives, banks and NGOs); they have 57.4% of
banking branches and 60.5% of the SCC.

As SCC are regulated and cluster like baking institutions, we regard them as a middle
ground between the banking industry and the alternative industries. Even though they
are regulated, this regulation is not as sophisticated and costly as traditional banks’
regulation. Even with an explicit deposit insurance scheme available to SCCs, there are
some uninsured institutions, but they are harmless to the public trust.

DEBATE

The financial crisis of 2008-2009 proved how devastating can be the lack of
transparency and debt overhangs. Several banks did not comply with risk management
standards, bearing the full cost of maturity mismatches and ignoring the potential
contagion underlying in structured financial products. Regulators and supervisors failed
to oversee the financial system while the monetary policy promoted an unsustainable
bubble in the housing market.

Colombia lacks of formal regulation to Alternative Financial Institutions. This means

that they are not enforced to manage their risks properly, transparency is at best
questionable and, if they fail, there is no one accountable of their bankruptcy. The
different institutions supervising them do not have any role in overseeing their credit
programs. For example, Public Utilities Superintendency enforces power, telecom,
water and sewerage and natural gas distribution policies as stated in the 142nd Act of
1994. It keeps record of fees, adequate provision and market competition within public
utilities. Superintendency of Economic Solidarity prevents members of cooperatives
from abuses and oversees the correct placement of resources. The Superintendency of
Familiar Allowance oversees the flow of expenditures of Cofamiliares, but it does not
enforce transparency in their multiple credit programs. Even more, Cofamiliares are
acting as deposit-taking institutions and no one oversees their financial performance.

These regulation loopholes could take its toll on the financial system and the economic
growth when institutions profit from risky maneuvers. For example, the sudden lost of
quality in Codensa’s loan portfolio is not only a symptom of bad economic
performance, but of an exaggerated growth in credit supply and of an erosion of lending
standards. If they are not required to keep loan loss provisions, they might face the
materialization of liquidity risks, just as American investment banks did in 2007-2008.

Brom (2009) highlights three main risks that any microfinance institution should
address. First of all, a liquidity risk arises when asset and liability maturities differ. AFI
must manage to perform three things: i) meet maturing obligation when due; ii) fund
projected growth; and iii) continue operations throughout an unexpected liquidity
disruption. As we have seen, AFI locate all of their efforts to manage their assets,
making predictable and understandable paying schedules that avoid the risk of default.
But they must take into account the lessons learned in this crisis: funds could become
scarce and expensive, making liabilities management as important as any of the other
features of the loan programs. The different types of funding must be closely watched
and a cap defined to avoid concentrations in just a few alternatives. Finally, since the
loan portfolio is growing through time, management shall define a rolling scheme that
matches liabilities and assets maturities and an appropriate cushion (loan loss
provisions) to meet timing mismatches between debt repayments and the arrival of new
financing.

Second, there is an interest rate risk regarding an unexpected change of the cost of
funding that causes a mismatch between assets and liabilities. Lending through
alternative channels involves tight conditions, fixing assets for a very long time. Any
credit recipient would balk at the idea of higher payments when costs surge and, with
increasing competition, this possibility seems remote. Even more, if the client has a
goof credit record, she is not expecting to be issued a new loan with higher interest
rates. AFI must then find their breakeven rate for the average cost of funds and avoid
taking profit from interest rate mismatches.

This is a complicated issue, taking into account that Colombia has a cap for the rates
can legally be charged into credits. Usury rates reduce the supply of credits in formal
markets, afflicting low-income population mainly (Anif, 2009). According to Febraban
data (Febraban, 2005), the ratio clients-to-population-living-with-less-than-US$2-a-day
was larger in countries without usury rates. Usury rates pressure AFIs, since they are
unable to charge rates that equilibrate the assumed risks and are higher than usury rates.
Third, there is a foreign currency risk arising especially among NGOs. It consists of any
mismatch between the currencies of assets and liabilities. Assets are denominated in
local currency (in this case in Colombian pesos) and liabilities may be denominated in
different foreign currencies. Any sudden devaluation of local currency would
undermine AFI’s capability to meet their liabilities and crumble its operation. Any AFI
holding liabilities in foreign currencies shall make prudent hedging of its debts, using
instruments like options, futures or forwards. Not long ago, the Colombian Stock
Exchange developed the first derivatives to hedge against exchange rate variation,
pooling different pre-existing instruments. This translates into means to accomplish
proper foreign-exchange risk mitigation and they should be employed to avoid sudden
local currency devaluations effects.

On the other hand, there are several transparency problems that put a veil over AFI
operations. They are not required to file any report on credit matters to the Financial
Superintendency and are not compelled to take loans’ data to credit bureaus. Those
companies publishing data (in particular those involved in the financial system through
bonds or shares) only disclose convenient information to support their social
responsibility programs. It remains unclear whether those programs are properly
funded, their risks mitigated, their projected growth determined and their systemic
involvement measured.

However, AFIs holds some advantages when compared with banks. Official financial
institutions require more information from their clients. Institutions must build a risk
profile and comply with money laundering controls. The documents demanded are id,
employee certificate, income statement, income tax return or equivalent, three past bank
statements, among others. The main data required by banks is financial history and,
since unbanked lack of any prior relation with banks, they are rejected on this account.
Besides the information and documents that must be presented at the banks, credit
applicants must wait until their forms are assessed; a process that could take a full week
if needed. Unbanked then have a preference for programs such as those provided by
AFI over banks as they acquire loans much faster and easier.
Consumer loans might reduce vulnerabilities for the poor as they are able to smooth
their consumption path. Credit lines allow them to satisfy some of their basic needs,
promotes asset building and the purchased assets can be sold latter on to mitigate
income reduction. Credit may be also used to purchase assets that generate further
income. Microloans are intended to fund high return investments, such as education or
productive assets. Recent literature shows that these types of loans do have impact on
consumption but do not improve education or health (Banerjee et al, 2009). Much of the
lending programs analyzed here are used just for electric appliances, furthermore, while
only the highest income strata buy computers, most of the low income households
purchase low quality television sets. Although electric appliances can be sold in order to
compensate lower income at certain times, they do not reduce poverty. This means that
the pro-poor argument is, at best, questionable.

Barth, Caprio and Levine (2006) have found significant empirical evidence linking
disclosure regulation and banking stability. The financial systems where information
was more transparent had better results in terms of stability. In this line of argument, we
believe that credit lending institutions should disclose their information in a timely and
organized basis that is easy to revise. Accounting standards are important as well,
Cofamiliares currently have a parallel accounting that does not easily match financial
accounting: they classify over 60% of their portfolio as other types of credit.

CONCLUSIONS

According to our calculations, the alternative financial system credit in the economy has
a substantial size: outstanding loans in 2008 amounted to no less than USD 2.3 billon,
or 0.97% of GDP. The year before alternative outstanding credit was worth USD 1.9
billions, or 0.96% of GDP. Meanwhile traditional banking consumer credit was worth
over USD 17 billion or 8.16% of GDP in 2007 and 7.12% of GDP in 2008. In monetary
terms traditional banking outweighs alternative financial institutions in almost eight to
one. In human terms, our estimation determines that no less than 3.9 million
Colombians where granted some sort of credit by AFIs in 2008, while traditional
banking had 4.2 million consumer credit customers.
The literature shows that alternative financial institutions that promote financial
inclusion are good since they encourage poor’s banking. Non-banking institutions are a
potential alternative to abate market failures in the credit market (particularly adverse
selection). The results stemmed from Codensa’s credit program show that this might be
the result of AFIs in Colombia. The increase in the financial depth will have a positive
effect on growth and poverty reduction.

However, there are different problems with this segment. First of all, since there is no
oversight, data are sparse, obscure or nonexistent. Second, a good part of AFIs lack of
proper regulation, allowing them to have inappropriate credit policies and risk hedging.
These issues become relevant after the world financial meltdown of 2008-2009: grey
areas in the financial system might become the source of the next crisis.

Chile has several different credit card providers a part from traditional financial
institutions. Almost any formal business may issue credit cards if they comply with
some general regulations, such as: Registration at the Sinancial Superintendence, annual
detailed information disclosure to supervisors and a minimum amount of value for their
transactions. If the credit card provider is large enough, it should face minimum capital
requirement and additional disclosure obligations. The Chilean experience shows that
there are plausible regulative solutions to the AFIs obscure behavior in Colombia.

Future works might involve a deeper analysis of the effects of AFIs credit programs on
poverty-reduction and banking. Apart from Codensa there are not more works relating
to these matters. For example, there is not measurement of the real impact of the effect
of Promigas’ lending scheme over poor people or how many of the program’s clients
are being banked. However, these results may be obscured by a sudden meltdown of
AFIs that stimulates the public mistrust. There is clear need for a more decisive action
from government, encouraging disclosure and more transparent credit policies from
AFIs.
BIBLIOGRAPHY

Arbeláez, M.A., García, F. and Sandoval, C., 2007. “El ‘Crédito Fácil Para Todos’ de
Codensa, un programa de impacto social para Bogotá”, Fedesarollo.

Asobancaria, 2008. “Reporte de bancarización en Colombia” Diciembre.

Banerjee, A., Duflo, E., Glennester, R., Kinnan, C., 2009. “The miracle of
microfinance? Evidence from a randomized evaluation” In:
http://www.microfinancegateway.org/gm/document-
1.9.34827/The%20miracle%20of%20micro%C2%85nance.pdf

Barr, M.S., 2004. “Banking the Poor: Policies to Brinf Low-Income Americans Into the
Financial Mainstream”. University of Michigan Law School, The John M. Olin Center
of Law & Economics, Working Paper Series 2004 Working Paper 48

Barth, J. R., G. Caprio Jr. and R. Levine, 2006. “Rethinking Bank Regulation: till angels
govern”, Cambridge University Press

Beck, T., Demirgüç-Kunt, A. and Levine, R., 2004. “Finance, Inequality and the Poor”.
Journal of Economic Growth, Vol.12 Issue:1; pp.27-49

Besley, T., 1995. “Nonmarket Institutions of Credit and Risk Sharing in Low-Income
Countries” Journal of Economic Perspectives, No.9 pp.115-127

Bradley, C., Burhouse, S., Gratton, H. and Miller, R.A., 2009. “Alternative Financial
Services: A Premier” FDIC Quarterly Volume 3, No 1. Federal Deposit Insurance
Corporation

Brom, K., 2009. “Asset and Liability Management for Deposit Taking Institutions”
Washington, D.C.:CGAP, May

Brunnermeier, M., 2009. “Deciphering the Liquidity and Credit Crunch 2007-08”,
Journal of Economic Perspectives, 2009, 23(1), pp. 77-100
Caskey, J. Ruiz, L. Solo, T., 2004, “The Unbanked in Mexico and the United States”
World Bank Policy Research Working Paper No. 3835

Clavijo S. y Gil C., 2008. “Near-banks, comercio y crédito de consumo” Comentario

Económico del Día 12 de junio de 2008, ANIF.

Clavijo S., Rojas C.I., 2008. “El Auge Del Crédito de Consumo: Implicaciones para los
“Cuasi-bancos”. Informe Semanal No 943, ANIF

Demirgüç-Kunt, A. & Levine, R., 2008. "Finance, financial sector policies, and long-
run growth," Policy Research Working Paper Series 4469, The World Bank.

Emprender, 2008. “Microcrédito en Colombia a Septiembre de 2008”. Boletín

Microfinanciero No 20, Cooperativa Emprender, November.
Honohan, P., 2005. “Measuring Microfinance Access: Building on Existing Cross-
Country Data” World Bank Policy Research Working Paper 3606, May 2005

Midas, 2007. “Encuesta de crédito informal en Colombia” En:

http://www.midas.org.co/BancoMedios/Documentos%20PDF/informe%20final-
encuesta%20credito%20informal%5B1%5D.pdf

Temkin, K., Sawyer, N., 2004. “Analysis of Alternative Financial Services Providers”.
The Fannie Mae Foundation.

Solo Tova Maria, and Marnoth Astrid, 2006. “Access to Financial Services in
Colombia; The ‘unbanked’ in Bogotá”. World Bank Policy Research Working Paper
3834, The World Bank.