Potential demand for microloans: A household-level study

ABSTRACT Having an inclusive financial system is an important tool for economic and social development. Given the lack of depth of financial markets in emerging economies, microfinance represents a paradigm shift. It involves incorporating instruments into the financial management of households that can lead to a genuine reduction in vulnerability by generating greater access to durable consumer goods or housing. For this reason, this article analyzed the characteristics of households excluded from formal financial services in the city of Bahía Blanca, Argentina, in 2021. Once identified, they were used to calculate the potential demand for microcredits (MCs). This allows measuring the importance of having an alternative to meet the unsatisfied demand for small-scale credit of the population excluded from the formal financial market. Comparing the unsatisfied needs with the actual supply of MCs, the results obtained show a considerable scope for developing MC institutions in the city (but also in Argentina).