51
Figure 2.2. Depth of Outreach of the Three Rural Credit Unions (percent)
Note: The three rural credit unions in the study are Unio"n Popular (in Guatemala), Cupocredito (in Colombia), and OSCUS (in Ecuador). Source: Paxton and Cuevas (1998).
sour later. In addition, credit unions consistently offer lower minimum initial deposit sizes and lower minimum balances than bank and nonbank competitors. On the lending side, the widespread acceptance of collateral in the form of personal guarantees, such as those offered by co-signers, in addition to borrowers' own deposit balances, makes credit unions an accessible source of small loans with low transactions costs. Furthermore, members who have established a track record of on-time repayment typically access new loans or overdrafts almost automatically. Sustainability The credit unions analyzed here show high levels of self-sufficiency, relatively high staff productivity, and reliance on their own mobilized savings to fund their loan portfolios. Table 2.2 presents these and other performance indicators. The analysis calculates a subsidy dependence index (SDI) for the six case studies. It goes, from worst to best, from 0.12 for Cupocredito to -0.06 for UFA (table 2.2).2 The SDI value means that Cupocredito would require an increase of 12 percent in the interest rate charged on loans in order to cover all costs, including the opportunity cost of its equity, without any subsidy. The value is not 12
2
See Yaron, Benjamin, and Piprek (1997) for a definition and explanation of the SDI.
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RELEVANCE AND CHALLENGES