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View the PDF File: The Market for Microfinance in Brazil: An Industry Analysis (opens in a new window)

Abstract: Submitted in partial fulfillment of the degree of Master of Arts in Law and Diplomacy at the Fletcher School of Law and Diplomacy. Abstract: This MALD Thesis provides an overview of the market for microfinance in Brazil based on a review of the existing literature and findings from primary research on the ground. Even though it is the birthplace of modern microcredit, Brazil today has an underdeveloped microfinance sector, with demand being largely unmet by supply. This thesis looks at the root causes of the phenomenon as commonly cited in related literature, and tests the arguments against findings from primary research. The Brazilian economic context of high interest rates and heavy taxation exacerbates the problem of informality and related limited access to credit, and the micro-enterprise sector is a primary source of employment in the country. This would suggest that Brazil is an attractive country for MFIs. However, there are only a handful of MFIs that have reached scale. The strong presence of the state through social assistance programs and the abundance of consumer credit are often cited as the main reasons why the sector has not really taken off in Brazil. This thesis provides a detailed breakdown of supply of and demand for micro-financial services, and tests the findings against primary research conducted in three rural cities in Brazil's state of Goias. Recommendations are made on how to best promote the microfinance sector in Brazil, given the competition from consumer credit agencies and government subsidized credit lines.