Microfinance Cuban Style: The New Financial Framework for the Cuban Non-State Sector

Abstract

The Cuban economic system and, along with it, the Cuban financial system has been changing since the coming to power of Raul Castro. In this paper, we analyze some of the changes in the Cuban financial system and the goals of the government in implementing these changes. Using the results of a survey of non-state businesses, we look at the microfinance sector – the provision of financial services to the small and medium enterprises in the non-state sector – from two perspectives: first, the nature of the new credit regulations and bank policies and how they accomplish the evaluation of credit to a hitherto non-existent sector; and second, how do these small business clients view their relationship with their lender state banks. We look at Cuban finance from the perspective of a socialist economy in transition and compare it to microfinance elsewhere, particularly in China and India.

Keywords: Cuba, Private Sector, Reform, Banks, Microfinance

JEL Classification: G21, G28, L26, M13, P34