Impact of the New Financial Services Law in Bolivia on Financial Stability and Inclusion

Dyna Heng

No 2015/267, IMF Working Papers from International Monetary Fund

Abstract: This paper examines the impact of the new financial services law in Bolivia—including credit quotas and interest rate caps—on financial stability and inclusion. So far, credit to “targeted” sectors is growing as intended by the law but the increase in the average loan size of microfinance institutions and the declining number of borrowers point to potentially adverse effects of the interest rate caps on financial inclusion. Looking ahead, while the new law contains many good provisions, international experience suggests that promoting financial access through credit quota and interet rate caps is very challenging. Indeed, trying to meet the 2018 credit target for the productive sectors and social housing could imply the build up of significant financial stability risks. These will need careful monitoring and possible modifications to the credit quotas and interest rate caps.

Keywords: WP; credit quota; credit growth; credit policy; GDP ratio; allocation purpose; supply development; Bolivia; Financial Development; Financial Inclusion; Financial Stability; credit shock; credit condition; credit supply shock; credit demand; loan size; credit intervention; credit supply condition; Credit; Interest rate ceilings; Loans; East Asia (search for similar items in EconPapers)
Pages: 31
Date: 2015-12-18
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=43473 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2015/267

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().