Microcredit as a Tool for Banking: An Empirical Study in Dominican Republic.

The purpose of this paper is to analyze how microcredit has facilitated the financing of micro-entrepreneurs in the Dominican Republic and to study the major variables that contribute to facilitating greater access to financial services. For this purpose we have developed an empirical research design based on a sample of 958 microenterprises in 1999 and 901 in 2009. The results show that in the period under analysis there has been an increase in the number of savings accounts, credit cards and bank credit on the part of micro-entrepreneurs. There was a corresponding reduction in the proportion of companies that borrow from NGOs and credit cooperatives. It may be the transformation of some of these latter institutions to regulated entities that has led to the increase in borrowing from banks and to the reduction in other microcredit. These results are relevant and useful in helping managers of the microfinance sector to identify existing opportunities and to recognize the need to add value to the products they offer to their customers. It will also be useful for monetary authorities to promote regulations to facilitate access on the part of micro-entrepreneurs to financial banking services.