Paula Garda
OECD
Michael Koelle
OECD
OECD Economic Surveys: Peru 2025
Abstract
Limited access to finance remains a key constraint for Peru’s micro, small and medium-sized enterprises (MSMEs), which account for 85% of employment and 99% of firms, restricting their ability to invest, grow and formalise. Many MSMEs operate informally, lack credit histories, and rely on informal lenders, leaving many without access to formal credit. Even among formal firms, high interest rates, limited credit history, and high transaction costs result in limited access to finance, despite a competitive environment in the MSME finance segment. Capital markets are underdeveloped and offer few alternatives to bank loans, especially for smaller firms. Reforms should focus on lowering financing costs by improving credit information, expanding public credit guarantees and promoting alternatives to bank loans. For informal firms, expanding digital financial services and linking finance to formalisation milestones would support inclusion and productivity. Deepening capital markets and improving digital financial infrastructure would broaden funding sources, boost private investment, and foster a more dynamic business environment.
Access to finance is a persistent barrier to business growth in Peru, limiting private sector development, long term investment, and the country’s capacity to transition to a green economy. Despite macroeconomic stability and a sound financial system, private credit stands at just 42% of GDP, well below the OECD average of 76% and lagging regional peers (Figure 2.1, Panel A). Credit penetration is low, particularly for micro, small and medium-sized enterprises (MSMEs) and outside Lima (Figure 2.1, Panel B and C). Traditional credit-based banking dominates, and domestic capital markets are thin and illiquid (Figure 2.1, Panel D), limiting access to the long-term financing that is critical for investment in infrastructure, innovation, and climate-resilience.
Note: LAC is a simple average of Brazil, Chile, Colombia, and Mexico. Panel D measures the total value of listed companies' equity relative to the size of the economy.
Source: World Bank WDI; BCRP; OECD (2025), Financing SMEs and Entrepreneurs: 2025 highlights; SBS; IMF World Economic Outlook database: April 2024.
Limited access to finance is closely linked to Peru’s high informality, which constrains firm growth and productivity. MSMEs, which account for 85% of employment, are mostly informal and disproportionally affected by the limitations to financial market development. Formal MSMEs—those registered and tax-compliant—can access credit but face high interest rate spreads and stringent collateral requirements, limiting their growth. Alternatives such as equity financing, leasing or factoring remain underutilised, and access to finance outside Lima is particularly limited. Informal firms – typically small, low-productivity, and unregistered – lack credit histories and rely heavily on family networks, informal lenders or microfinance. Nearly half of MSMEs lack access to formal credit (OECD/CAF/SELA, 2024[1]), often due to informality, high transaction costs and insufficient collateral or credit histories. Female-led MSMEs are less likely to access formal credit due to collateral constraints, higher informality, limited financial literacy, and time-care burdens (World Bank, 2025[2]).
Expanding access to finance requires differentiated strategies. For informal firms, the priority is to expand access to financial services through fintech, mobile banking, credit scoring based on digital payment histories, and tailored microfinance. These measures should be accompanied by mechanisms to link financing to formalisation milestones – such as business registration, tax ID acquisition, or social security enrolment – supported through technical assistance and simplified procedures, and measures to promote firm productivity growth, such as access to training and mentoring, digital tools, or integration into formal value chains, to avoid misallocation and ensure that finance supports dynamic, scalable businesses. Formal MSMEs would benefit from policies to reduce intermediation costs and promote asset-based and equity finance. Importantly, lowering the cost and improving the availability of credit would also benefit high-potential informal MSMEs, by strengthening the incentives to formalise and making the advantages of entering the formal system more visible.
Deeper capital market development is also needed to support long-term investment and diversify financing sources. Capital markets can complement bank lending by offering long-term finance to large, high-potential firms and infrastructure projects, while freeing up credit for smaller businesses. Addressing these gaps would also support Peru’s climate transition by enabling investment in clean technologies and adaptation (Chapter 4).
Expanding access to finance would help high-potential MSMEs scale up and generate more formal jobs. But this alone is not sufficient. A broader strategy is needed to tackle informality, including regulatory reforms that reduce the cost of business formalisation—such as reducing administrative barriers, streamlining licences, registration procedures, and tax compliance —as well as labour market reforms to lower non-wage labour costs and improve enforcement, as highlighted in the 2023 OECD Economic Survey of Peru (OECD, 2023[3]) and elsewhere in this Survey. Formalisation and upscaling of MSMEs in Peru is also be supported by training, mentoring, innovation and technology transfer, provided by various institutions through different programmes, including the Ministry of Production and the Ministry of Labour and Employment promotion, the development bank COFIDE, the business support centres CITE, the National Microenterprise Development Fund (FONDEMI), the chambers of commerce, international development cooperation and others. Greater coordination among these actors would help expand reach and effectiveness. Together, these policies would improve the formal business environment supporting firm and productivity growth.
This chapter focuses on policy priorities to expand and diversify MSME financing in Peru. It first explores reforms to reduce interest rate spreads and promote alternative financial instruments and digital solutions. It then discusses policies to develop capital markets to provide alternatives to bank credit and support long-term investment. The government plays a key role in expanding financial depth by creating a regulatory environment that supports market development and fosters competition across financial services. Stronger legal protections for creditors and shareholders are also needed to reduce investor risk and improve access to finance for formal firms, while also creating better incentives for firms to formalise and benefit from improved financing conditions. Ensuring strong, independent supervision is essential to build trust and attract long-term investment. Financial deepening must go hand in hand with safeguards to preserve stability and protect consumers.
2.2.1. Improving MSMEs’ access to bank credit
Bank credit remains the primary source of financing for businesses, particularly for MSMEs. While commercial banks dominate lending, the MSME sector benefits from a variety of non-bank financial institutions specialised in the SME and microfinance segments (Figure 2.2, Panel A). However, MSMEs still struggle to obtain credit at affordable rates, because of several challenges, including a deteriorating credit portfolio since the COVID-19 pandemic and 2023 economic slowdown (see Chapter 1), high transaction costs and higher default risk. The gap in interest rates charged to MSMEs and large firms is wider than in any OECD country (Figure 2.2, Panel B). Improving MSME’s access to bank credit therefore requires first and foremost lowering the cost of financing. This requires tackling the different reasons for the interest rate spread: limited information to assess creditworthiness, high transaction costs relative to the loan size, high costs of refinancing for lenders, and limited collateral (Choy, Costa and Churata, 2015[4]).
Improving data-based risk assessment frameworks benefits formal firms and—by increasing the rewards of formality—can incentivise informal firms to formalise. High informality hampers credit assessments, as many firms lack verifiable financial histories. Earnings are also typically much more volatile (Engbom et al., 2022[5]), increasing the basis risk for lenders. Moreover, outdated or inaccurate property registries and high informality of homeownership restrict collateral-based lending, which secures most small business loans in OECD countries. Peru created a legal framework in 2006 to improve MSMEs’ access to credit by allowing mobile assets (such as machinery, inventory, accounts receivable, and even livestock) as collateral, but uptake remained low due to burdensome procedures, limited awareness, and weak enforcement. A recent reform introduced a digital platform to simplify registration, reduce costs, and improve legal certainty.
Note: LAC is a simple average of Brazil, Chile, Colombia, and Mexico. SMEs include micro, small and medium-sized enterprises.
Source: SBS; OECD, Financing SMEs and Entrepreneurs 2024.
Mitigating SME credit risk
Strengthening credit registries by including alternative data on an individual’s or a firm’s financial transactions (e.g. utility providers, public authorities, internet and telephone companies) and advancing digital credit scoring using AI can improve risk assessments. To some degree this is already done by private credit bureaus, and in January 2025 regulation was updated to allow basing decisions about SME loans on verifiable transactions data. Some countries, such as France, enhance credit registries with company accounts data. Peru could consider re-introducing a past requirement for firms above a certain size threshold to publish their accounts, a practice which stopped to be mandatory for non-listed companies in 2016 following a court ruling. The financial superintendence SBS is preparing a new public credit registry covering financial cooperatives, key lenders to MSMEs especially in regions outside Lima. Ensuring full implementation of this registry and its eventual interoperability with the existing public credit registry for the banking sector will be important to improve access to finance of MSMEs, on the one hand, and to level the playing field between commercial banks with privileged access to information and financial cooperatives, on the other hand, allowing cooperatives to better compete against a highly concentrated banking sector.
Open Finance could foster new innovations in credit scoring and MSME financing based on data across the whole financial system. The Central Bank, which is responsible for regulating payment systems, is implementing an ambitious Open Finance agenda with the aim of making all payment technologies interoperable, following on the successful spread of digital wallets enabled by pre-emptive regulation (Vega and Vasquez, 2022[6]). Accelerating the development of other elements of Open Banking regulated by the Superintendencia de Banca, Seguros y AFP (SBS)—the sharing of consumer banking, transaction, and other data among all market participants – by developing and implementing data sharing standards could further improve credit risk assessment and enable a more dynamic business finance market. Brazil, for example, has been implementing an Open Finance agenda since 2021, with mandatory data sharing for all the largest banks subject to financial regulation. Open Finance and interoperability mandates need to be complemented by other measures including data privacy and safety (see below), increasing formality (see Chapter 3) and modernising and updating the land registry (see Chapter 4) to facilitate the more widespread adoption of collateral-based lending and to reinforce incentives to formalise.
Lowering operational costs
Administrative costs, especially for small loans, significantly inflate interest rates. They explain more than half of the interest rate differential between small and large firms (Choy, Costa and Churata, 2015[4]). Lenders have adapted their business models to the high informality among MSMEs by relying on in-person field visits to gather information about the firm, which together with Peru’s challenging geography increases their operating costs. Tailoring compliance requirements to loan size and risk and moving away from one-size-fits-all regulation can reduce costs and improve access. For example, in May 2025, financial institutions’ correspondent agents – such as shopkeepers in remote villages – and electronic banking offices were authorised to handle more operations including credit evaluation, account opening and account disbursements subject to certain operational limits. Expanding the digitalisation of financial and administrative processes could bring additional cost reductions. Ongoing public digitalisation efforts, including the tax authority and the civil registry office, are welcome, and should be complemented by digital solutions tailored to financial applications (see below).
Easing the cost of funds for lenders
Smaller lenders serving MSMEs face higher capital costs, partly due to Peru’s shallow capital markets. The corporate loan segment is served by the largest commercial banks that can refinance themselves cheaply thanks to access to a range of credit and capital markets, a solid and diversified balance sheet, and healthy profit margins. These banks prioritise lending to large firms due to their lower credit risk, lower administrative costs, and better information. MSMEs are instead increasingly dependent on second-tier funds comprised of smaller institutions with a much higher cost of raising capital. Deepening capital markets for Peru’s largest firms, as discussed below, can indirectly improve MSMEs’ access to lending by freeing up credit and reducing overall credit costs.
Strengthening credit guarantee programmes
Since 2019, the Fondo Crecer credit guarantee programme managed by the state development bank COFIDE has been guaranteeing up to 75% of eligible loans for SMEs and exporting firms. During the pandemic and the 2023 social unrest and climate events, new emergency credit guarantee programmes successfully expanded MSME credit and reduced interest rate spreads, highlighting unmet demand. Default rate of the pandemic programmes were high, between 12% and 25%, reflecting in part the nature of those programmes – preventing or at least delaying firm widespread bankruptcies to “flatten the curve” (Demmou et al., 2021[7]) – but also serving as a reminder to carefully design programmes to maximise their benefits and minimise moral hazard.
Guarantees primarily benefit formal MSMEs, but improving their effectiveness can help bring informal firms into formal lending channels. International best practices increasingly target credit guarantees to specific investment projects (e.g. green or digital projects), with built-in incentives for risk-sharing and responsible lending in order to minimise the risk for the public sector. For example, digitalisation and investment in intangibles in France and Korea, and green investments in many EU countries including Ireland, Finland, France, Portugal, Romania, Bulgaria and Sweden but also in Korea and Mexico (OECD, 2024[8]). Targeting is key to reducing moral hazard and over-indebtedness risks. Other good practice elements include ensuring – through coverage ratios, terms of the guarantee, and collateral requirements – that all parties, including both lenders and borrowers retain a sufficient share of the risk and responsibility (Cusmano, 2018[9]).
2.2.2. Developing alternative financial instruments for MSMEs
MSME finance needs to look beyond bank credit
Further developing alternative financing instruments, beyond bank financing, can significantly improve access to finance for small and medium-sized firms, particularly informal firms that struggle to meet traditional collateral requirements or navigate complex banking procedures (OECD, 2023[10]). Yet, according to OECD data which covers operations by supervised financial institutions, the use of alternatives such as factoring, leasing and hire purchases remains limited and has even declined (Figure 2.4). In part this may reflect entry of other providers following regulatory changes; for example, factoring services by unsupervised entities have seen healthy growth in the most recent years (Ministerio de Produccion, 2025[11]). However, the participation of MSMEs in the factoring market remains at about a quarter. A reform in 2020 provides an updated legal framework for alternative financial instruments such as crowdfunding. However, limited awareness and structural and operational barriers hinder their expansion. Moreover, broadening access to financial instruments has to be balanced with other objectives of financial regulation such as due diligence for preventing money laundering and financial services offered by organised crime.
Developing the factoring market
Factoring can help formal MSMEs with liquidity and also offer a viable entry point for informal firms to formalise by issuing invoices and monetising receivables through recognised platforms. Factoring remains a niche financial service in Peru, characterised by a small number of transactions with relatively high values. Factoring is a type of financing where a business sells its unpaid invoices to a third party at a discount in exchange for immediate cash. One of the main operational barriers is the invoice verification process, which is currently handled by a single platform operated by the largest commercial banks. This system is geared towards high value transactions and excludes many MSMEs with lower-value invoices. To make factoring more accessible, authorities could enable broader invoice verification services – potentially through existing platforms, such as the one managed by the tax authority for electronic invoicing and encourage the development of a factoring markets on which verified invoices can be offered to the highest bidder. Facilitating a low-value formal factoring market could also encourage greater formalisation among MSMEs, which sometimes rely on informal and unregulated forms of instruments that share similarities with factoring. In some countries, such as Mexico, state development banks offer public factoring services as part of value chain development programmes, helping MSMEs secure capital to better integrate into value chains.
Stimulating leasing and hire purchases
Leasing and hire purchases (HP) are asset-based financial contracts that allow firms to purchase an asset in instalments, with the firm using the asset over the contract duration and assuming its ownership once the contract is fully paid. The asset serves as a natural collateral, and the retention of ownership by the financial provider while the loan is outstanding obviates the need for cumbersome legal debt recovery procedures in the case of defaults; instead, the asset is repossessed by its owner and sold off. Leasing and HP contracts are common in many OECD countries. In countries such as Peru, leasing and HP mainly support formal firms, but they are also attractive for informal MSMEs by providing access to productive assets without complex loan procedures, circumventing inefficient legal systems and cumbersome bureaucracy procedures. For firms, the option of early termination of such contracts if the need for the asset becomes obsolete or its continued use becomes unaffordable for the firm, can accommodate business risks better than a classical bank loan. Evidence suggests that hire purchase contracts can induce MSMEs to make more high-risk, high-return business investments (Bari et al., 2024[12]).
The market for leasing and HP in Peru is small and has shrunk by more than half over the last decade (Figure 2.3). A major constraint for market development is the difficulty in legally repossessing a leased good in the case of default, exacerbated by the slow and ineffective legal system, as discussed in the 2023 OECD Economic Survey of Peru (OECD, 2023[3]). To ease repossession and prevent unauthorised resale of leased goods, a 2018 law created a Mobile Collateral Information System. However, implementation took seven years, and the system only became operational in early 2025. While this reform aims to boost use of mobile collateral, its effectiveness will depend on effective implementation, awareness, and enforcement; all of which should be closely monitored by authorities. Another recent reform has eased the regulatory requirements for leasing companies, fostering market entry. Authorities could encourage the growth of asset-based finance by raising awareness and conduct financial education among MSMEs or include such contract types in public SME investment promotion schemes, as is for example done in Germany.
Leasing and hire purchase, factoring and invoice discounting, adjusted by inflation (base year 2007), million PEN
Source: OECD Financing SMEs and Entrepreneurs Scoreboard: 2025 Highlights.
Fostering MSME equity finance though crowdfunding
Equity financing offers several advantages for firms over debt financing, especially for growth-oriented MSMEs. The absence of a fixed repayment obligation frees cash flows and allows firms to reinvest profits, and the risk sharing it implies incentivises larger and higher-risk, higher-reward investments (Meki, 2025[13]). Equity investments are complementary to debt finance, as a larger pool of investors or (for limited liability companies) a larger equity base reduces the debt ratio and improves creditworthiness. However, the absence of independently verified accounts and monitoring costs often means that the investor pool is limited to family and close personal networks making informal investments.
Modern financial solutions reduce the information asymmetries and transactions costs that have typically constrained formal equity investments into smaller, non-listed firms. Transactions on digital platforms and cashless payment methods such as digital wallets allow verifying a firm’s sales and costs. Crowdfunding platforms allow for matching small investors and small firms seeking equity investments. The crowdfunding sector in Peru has only been established in 2021 when its regulation by the Superintendence of the Securities Market (SMV) entered in force. While in 2024 five entities held licenses, only one platform disbursed new funding, with a total investment of around USD 10 million and an average equity stake of USD 60,000. Two entities left the market in early 2025. Given the novelty of this financing channel and the still ongoing market entry of providers, authorities should raise awareness among MSMEs and be vigilant for the need of regulatory adjustments.
2.2.3. Supporting the development of digital finance
Digital finance can improve financial inclusion, particularly for small, informal, rural and underserved businesses by enabling low-cost transactions and alternative credit scoring. While mobile payments have expanded rapidly, challenges remain: unequal digital access, low coverage of digital infrastructure, especially broadband, limited financial and digital literacy continue to limit the reach and impact of digital financial services. Advancing open data regulation, ensuring interoperability, fostering financial literacy, data protection, and consumer trust, and building digital infrastructure especially in rural areas can improve outreach.
Fintech regulation and innovation
Open Finance and a promotion of cashless payment systems can improve the competitive environment and provide the big data which on which fintechs base their business model. It can also level the playing field between new entrants and traditional banks that have large amounts of proprietary data (INDECOPI, 2023[14]). This seems particularly relevant in Peru where commercial banks are not only highly concentrated but often parts of larger conglomerates, as the 2023 OECD Economic Survey of Peru discusses (OECD, 2023[3]). Moreover, encouraging partnerships between telecoms companies, fintechs, and banks could improve MSME financing, especially in remote or rural areas and among informal businesses that are underserved by traditional lenders (OECD, 2023[10]). In several countries including India, Colombia and Mexico, fintechs use transactions data from digital wallets and QR code payment systems to assess small firms’ turnover and income as well as bill payment history to provide small loans or credit lines. Peru’s recent success with digital wallets provides an entry point for this, and the recent interoperability of payments system increases the scope for competition in this lending segment. Some commercial banks are already experimenting with developing alternative credit scores based on their proprietary data. The adoption of digital wallets for cashless payments could be further enhanced by allowing the distribution of social programmes and subsidies through them, as has occurred in Brazil.
Financial literacy, data protection, and consumer trust
Evidence shows that adoption of digital financial services in Peru requires trust, financial literacy, and digital skills (Robles, Miranda and Colan, 2024[15]). Building trust and digital capability is crucial for better financial inclusion of informal MSMEs, enabling safe and informed access to financial services. Developing trust through better financial consumer protection is a key pillar of Peru’s National Plan for Financial Inclusion; and overall Peru has an adequate financial consumer protection framework. However, there is room for improvement on governance and oversight to ensure financial services meet consumer needs, and on the mechanisms for filing a formal complaint.
Financial literacy in Peru is lower than on average in OECD countries, but similar to Latin American peers such as Chile and Costa Rica (OECD, 2023[16]). A particular concern are the low levels of financial literacy among owners and managers of MSMEs (OECD, 2021[17]). This calls for increased investment into training to develop financial literacy and digital skills, both among adults and among the youth, for example through modules embedded in secondary or technical education such as the SBS’s Finance at School programme. The rollout of a digital bank account for all citizens through Peru’s state-owned Banco de la Nación will further improve financial inclusion and should be accompanied by more training to increase uptake, financial literacy, and trust.
Finally, trust also requires robust data protection and cybersecurity measures. Consumers need to be confident that their personal and financial information and transactions history remains confidential, and that there is a robust infrastructure to prevent unauthorised payments. This is especially relevant given the current security situation (Chapter 1), with many small business owners being exposed to extortion by criminal gangs. Efforts to foster digital financial services need therefore to align with broader digital government strategies to promote digital literacy and risk awareness, ensuring a secure and trustworthy online environment for all citizens. The government is taking steps in this direction, including the establishment of a national digital authentication system, a national data interoperability platform and a national digital security centre.
Digital infrastructure and rural access
Improving digital infrastructure, especially in rural areas, is key to connecting informal firms to financial services and can facilitate their transition to formality. As of 2022, internet penetration stood at 75%, well below the OECD average of 90%, with sharp urban-rural divides: nearly all urban districts are connected, while one third of rural districts lack connectivity and about 20% of the population lacks mobile internet coverage. While efforts are underway to expand rural mobile broadband access and provide digital skills training, further investment is needed. Examples from Colombia, Mexico and Brazil, such as public broadband backbones to each municipal seat and community networks to facilitate access on a non-profit basis in rural areas could inform Peru’s strategy. Additional measures include streamlining regulation, enhancing coordination among stakeholders to lay local connections, exploring solutions based on satellite or mobile data networks, and setting up public Wi-Fi access points and kiosks.
Deepening Peru’s capital markets primarily benefits formal large firms and high-potential MSMEs by expanding and diversifying the country’s sources of long-term finance, supporting investment beyond bank credit and improving the financial system’s resilience. Furthermore, as more firms access other sources of financing it also frees up bank credit for smaller or newly formalised MSMEs. Yet, Peru’s capital markets remain underdeveloped, offering limited alternatives to bank financing (Figure 2.4) and market liquidity remains a critical weakness, with a turnover ratio of just 2% in 2023, far below regional peers like Brazil (119%) and Mexico (19%) (BCRP, 2024[18]). Global and domestic shocks have further weakened Peru’s stock market, eroding liquidity and asset valuations. The combined impact of the pandemic, global inflationary pressures, and synchronised interest rate hikes triggered capital outflows, while domestic political uncertainty led to record outflows in 2021.
Compounding these trends, Peru authorised seven rounds of pension fund withdrawals between 2020 and 2024, resulting in cumulative outflows equivalent to 9.4% of GDP by the end of 2022, with an additional 3% of GDP in 2024 (BCRP, 2024[18]). These withdrawals forced pension funds administrators (AFPs) to shift portfolios toward liquid, short-term assets, reducing long-term financing in local currency and increasing market volatility. As a result, the role of AFPs as institutional investors in the capital market has been drastically reduced. By the end of 2023, AFPs and institutional investors held just 6% of total market assets, far below the OECD average of 57%, contributing to weak long-term funding and undermining market depth (OECD, 2024[19]).
Restoring and expanding capital markets is crucial for enhancing investment opportunities and supporting economic growth. Several barriers, including high business informality, limited financial literacy, weak corporate governance adoption, and burdensome compliance and disclosure requirements, prevent many firms from tapping into equity and bond markets (World Bank, 2024[20]; BCRP, 2020[21]).
Efforts to deepen capital markets are already underway. Authorities, in collaboration with the World Bank, are working on a roadmap to address long-standing challenges (World Bank, 2024[20]; World Bank, 2024[22]). This initiative builds on a 2019 diagnostic report, from which less than half of the recommendations have been implemented. Peru’s OECD accession process presents an opportunity to accelerate these efforts. The proposals in this section align closely with the roadmap and offer a concrete basis to move forward. Priority actions include encouraging more large firms to sell shares to the public, helping small businesses join the capital market, and expanding the investor base. Strengthening the technical and operational capacities of the SMV, and advancing regional integration of capital markets would also help deepen capital markets.
Credit, corporate bond balance and public offerings, % of GDP
Source: BCRP.
2.3.1. Addressing the capital market’s low liquidity
Low market liquidity undermines efficiency, depth and attractiveness of Peru’s capital markets. Increasing capital market liquidity requires boosting both supply and demand of tradable financial instruments. On the supply side, this means improving free float and easing SME access to both equity and bond markets. On the demand side, it involves fostering participation of retail investors and expanding market-maker programmes.
Expanding supply of tradable instruments
Increasing free float for family-owned large firms would expand the supply of tradable shares and enhance market liquidity (OECD, 2019[23]). Family-owned firms dominate Peru’s corporate landscape and are often reluctant to increase free float due to concerns over losing of control. One solution is dual-class shares, where firms issue shares with different voting rights, allowing families to raise capital while retaining decision-making power. Another solution is encouraging staggered share sales where families commit to increasing float over time rather than in one large issuance to maintain market confidence without abrupt changes in control, as Chile has done. Strengthening corporate governance would also help family-owned firms gain investor trust and ease the transition to higher free float. A comprehensive adoption of the G20/OECD Principles of Corporate Governance for listed companies would align Peru with international best practices.
Deepening capital markets will require greater participation from high-potential small and medium-sized enterprises. Lowering market entry barriers for these firms is essential to broaden the supply of listed securities, complementing efforts to increase free float among larger firms. While most Peruvian SMEs are still far from accessing equity and bond markets, building the right infrastructure and regulatory framework now can help the most dynamic among them transition to market-based financing over time. This is particularly important in a context of high market concentration limiting liquidity: in 2023, the ten most traded securities accounted for over a half of total traded volume, and corporate ownership was highly concentrated, with these firms retaining 73% of equity shares, compared to just 7% in OECD markets (Segura and Villavicencio, 2022[24]; OECD, 2019[23]; OECD, 2024[19]).
Most MSMEs cannot enter the capital market due to high listing costs, strict disclosure requirements, and governance demands (World Bank, 2024[20]). While these measures ensure market integrity, they also deter smaller firms unfamiliar with corporate governance standards from accessing capital markets (OECD, 2023[25]). Implementing a business preparation programme tailored to help MSMEs comply with financial reporting and governance requirements would mitigate this issue. The programme could also provide matchmaking services with investors, improving access to capital and facilitating MSMEs’ market entry. Successful international models include Mexico’s Certificación Prime, Serbia’s corporate bond issuer programme, and Chile’s Growth & Scale initiative, which have helped smaller firms enter public markets.
Market supply is also constrained by high concentration, with mining companies alone accounting for 50% of market capitalisation, limiting sectoral diversification and investor options (Macroconsult, 2021[26]). To broaden participation across sectors and encourage firms from underrepresented sectors to enter the market, targeted incentives such as reduced issuance costs and sector-specific promotional campaigns would help. Chile and Mexico have successfully implemented similar policies, targeting tech, renewable energy, and industrial firms.
Efforts to facilitate MSME bond issuance would broaden the supply of tradable instruments and reduce the current dependence on a narrow set of issuers. The Alternative Securities Market (MAV), designed for this purpose, has fallen short of its objectives. Since its launch in 2012, only 19 issuers have participated, and placements have dropped from USD 30 million in 2019 to USD 7 million in 2022 (World Bank, 2024[20]). This reflects limited investor confidence, strong competition from traditional bank credit, and high compliance costs for SMEs. Simplifying the MAV’s regulatory framework by eliminating unnecessary complexities and aligning procedures more closely with MSME operations could revive activity. Introducing pre-approved templates and standardised issuance processes, following Thailand’s example, could streamline compliance and reduce both issuance time and costs. Reducing documentation and reporting requirements, while maintaining adequate investor protection, would further lower barriers and increase MSME participation.
Broadening the investor base
On the demand side, expanding and diversifying the investor base is essential to deepening capital markets and improving liquidity. One option is to boost the currently limited participation of retail investors by developing structured financial products with sovereign-backing, such sovereign bond-based ETFs, as recently done by Peru, and low-risk mutual funds, which offer retail investors a secure capital markets entry point (OECD, 2019[23]). This approach has been effective in Mexico and Brazil, where retail-focused sovereign bond instruments have increased participation. The recent launch of Peru’s first sovereign bond ETF is a welcome step to expand retail investor participation in capital markets. To sustain momentum, complementary financial education campaigns would further support market access for this type of investors. Publicly supported investment funds targeting mid-sized enterprises would attract both institutional and retail investors by reducing perceived risk and improving investment scalability. Peru’s national development bank COFIDE could act as a catalytic investor, co-financing such funds and targeting mid-sized enterprises, drawing from models in the UK (British Business Bank) and Colombia (Bancóldex and Fondo Nacional de Garantías).
Institutional investors, particularly AFPs, have traditionally dominated market holdings but their role has weakened following repeated pension fund withdrawals. Their preference for buy-and-hold strategies further limits secondary market activity and market depth. The 2024 pension reform prohibited the total or partial withdrawals of pension funds, with exceptions for a house purchase or terminal illness (see Chapter 1), but as of early 2025, Congress continues to debate further extraordinary withdrawals. Restoring the role of AFPs will require preventing new pension withdrawals, promoting voluntary pension savings, and adjusting regulatory frameworks to encourage higher allocations to traded instruments without undermining long-term investment goals.
Market-makers can help boost trading activity and render the market more accessible for non-institutional investors by continuously offering to buy and sell shares, which narrows price gaps and gives investors confidence they can trade when needed. The existing voluntary market-maker programme has limited impact to date, with just three active market makers covering only nine companies (World Bank, 2024[20]). Expanding the program to cover a broader range of securities and encouraging greater participation, through regulatory support, would help enhance trading activity.
2.3.2. Reducing institutional barriers
Institutional capacity also remains a constraint. The securities market regulator, Superintendencia del Mercado de Valores (SMV), faces resources (funding and staff) and capacity shortfalls that weaken its ability to regulate effectively, oversee market activity, and enforce regulations (OECD, 2024[19]). Outdated technological infrastructure limits its capacity to provide timely and accurate oversight, reducing market efficiency and transparency. Unlike its peers—the SBS and BCRP—the SMV lacks constitutional independence and remains under the Ministry of Economy and Finance, limiting its control over budget, staffing, and legislative initiatives. Better formal coordination between the SMV and the regulator of the financial system, insurance sector, and private pension funds, Superintendencia de Banca, Seguros y AFP (SBS), and the Central Bank (BCRP), along with stronger institutional capacity at the SMV, along with measures to strengthen the SMV’s operational independence and legislative authority, is essential to ensure robust oversight, improve transparency, and support capital market reforms.
2.3.3. Advancing regional integration
Deeper regional capital market integration through the Latin American Integrated Market (MILA) could expand investor access, enhance market liquidity and diversity funding for Peruvian firms. Chile, Colombia and Peru (which are members of MILA) are working towards full integration of their markets under the unified trading platform (Nuam Exchange). This aims to create a larger and more attractive market for international investors and provide firms with broader funding sources by enabling cross-border trading of securities. However, progress has been limited due to significant operational, regulatory, and political challenges including differences in tax regimes and settlement processes, differing financial regulations and the absence of a shared currency, which introduces exchange rate risk. Advancing regional integration could help Peru address structural weaknesses such as low liquidity and high concentration, by linking it with larger and more diversified markets. Key priorities include, harmonising regulatory standards, modernising cross border financial infrastructure, and strengthening cooperation among supervisors.
References
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[18] BCRP (2024), Reporte de Estabilidad Financiera.
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