Development of microfinance in Latvia: new look at savings and credit unions .... 85

Abstract

Purpose – Up to nowadays, microfinance was mostly associated with developing countries, but the global financial crisis 2008-2010 has brought developed and developing worlds together, facing growing poverty and social inequality. Microfinance promotes everyone‘s access to safe financial services as a key solution to financial and social problems. The author proposes to apply microfinance principles to Latvian conditions, using unique role and status of savings and credit unions (SCU).

Design/Methodology/Approach – The main structure of the paper is as follows:
1. Analysis of microfinance essence and its application to Latvian conditions;
2. Analysis of operation and members‘ profile of Latvian SCUs.
The paper is based on analysis of the latest literature and research papers in microfinance and financial cooperation fields; statistical and social research methods. In July-December 2010, the author has conducted a survey of SCUs‘ members (241 respondent) targeted to understand members‘ profile and opinion about SCUs operation.

Findings –
1. There is a broad niche for microfinance services in Latvia.
2. SCUs operation peculiarities, deep regional penetration and social goals are key features to occupy the microfinance niche on the market.
3. SCUs sustainable development in Latvia is possible only in case of strong support at macro and mezo levels; and well-organised and planned work at micro level.

Practical and social implications – The proposed microfinance platform can become a key tool to combat poverty and social exclusion in the country.

Originality/Value – The proposed microfinance platform is developed by the author especially for Latvian conditions and is based on unique primary data received from Latvian SCUs network.