Expanding Credit and Savings in Peru

This study identifies a set of elements that determine the development of banking penetration, emphasizing macroeconomic, structural and institutional factors. The study also offers some recommendations aimed at promoting credit and savings in Peru. Specifically, the study identifies how to improve the coverage of information available to credit reporting bureaus, the formalization of property ownership and the system of guarantees, thus introducing a simpler and less costly registry, efficient use of guarantees and greater transparency in judicial auctions. With regards to factors inherent to the banking industry, developing products and services that are accessible to lower income populations will in some cases require state support. Firstly, it is essential that companies be required to pay salaries via the financial system. Likewise, \"low cost default accounts\" are recommended, in addition to increased investment in point-of-sale terminals for use with credit or debit cards (POS), tax incentives for payments made with cards and optimizing the correspondent ATM system (simplifying legalities). Bank lending should also be promoted in sectors such as the micro and small enterprises sector by use of commercial invoices as a means of funding, thus generating liquidity via other assets at micro and small enterprises and cutting their costs. To this end the regulations covering such financial operations must be clear and precise, with no gaps that might lead to uncertainty or make their use more expensive. The recommendations laid out in this study have been designed to be put into practice jointly. It is estimated that in a conservative scenario, implementing the proposals would increase banking penetration (measured by bank placements) by more than 65% over the next ten years.