Review of Public Investment in Financial Infrastructure: Metropolitan Lima versus Southern Cities (Arequipa, Tacna, and Moquegua)

Abstract

This study quantifies and compares public investment in financial infrastructure (PFI) between Metropolitan Lima and southern Peruvian cities (Arequipa, Tacna, and Moquegua) during 2010-2022. Using a narrative review of administrative sources and specialized literature, it found that Lima concentrated 68 % of national PFI, while the south received only 9 %, creating a 3.3-fold per-capita gap. Investment efficiency in the south was 1.7 times lower than in Lima due to smaller economies of scale and weak institutional capacity. This inequality perpetuates high transaction costs, limited credit access, and lower resilience to regional shocks. We propose creating a decentralized fund financed by mining royalties, setting minimum per-capita PFI targets, and offering tax incentives to private banks for expanding networks in small localities. The research provides unprecedented evidence on subnational PFI and highlights the need for active territorial compensation policies to reduce financial gaps and promote regional convergence in Peru.