Financial Reforms in the Credit Union System of Costa Rica
Loading...
Date
1989-09
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Ohio State University. Department of Agricultural, Environmental, and Development Economics
Abstract
In 1989, the credit union system in Costa Rica is once again faced with a serious crisis of insolvency, after an impressive recovery from its crisis in 1980-1981. This paper outlines the major structural problems that confront the credit union movement in Costa Rica and that explain its current crisis. It is felt that if these structural problems are resolved, the future performance of the system can be significantly improved. The first section presents a brief summary of the major events that led to the private financial markets crisis in 1987 and 1988 and discusses its impact on the credit union system. The second section focuses on the institutional weaknesses of the individual credit unions as financial intermediaries, and suggests important reforms to overcome them. Finally, the third section suggests the optimal design for the second level organizational structure for the credit unions, to address the major problems discussed here.