Innovative Experiences in Access to Finance: Market-Friendly Roles for the Visible Hand? (Latin American Development Forum) - Softcover

De La Torre, Augusto; Gozzi, Juan Carlos; Schmukler, Sergio L.

Softcover

ISBN 10: 0821370804 ISBN 13: 9780821370803

Publisher: World Bank Publications, 2017

Synopsis

Interest in access to finance and awareness of its importance have increased significantly
since the early 2000s. Growing evidence suggests that lack of access to credit prevents
many households and firms from financing high-return investment projects, which has an
adverse effect on growth and poverty alleviation. Despite the increasing awareness of the
importance of access to finance among both researchers and policymakers, there are still
some major gaps in our understanding of the main drivers of access, as well as about the
impact of different policies in this area.

This book aims to fill some of these gaps by discussing recent innovative experiences in
broadening access to credit in Latin America. These experiences are consistent with an
emerging new view that, while recognizing the central role of the public sector in improving
the contractual and informational environment for financial markets, also contends that
there might be room for well-designed, restricted interventions in collaboration with the
private sector to foster the development of financial markets and broaden access to them.
In particular, the book analyzes, among other things, some interesting experiences from
Brazil, Chile, Colombia, and Mexico that use different instruments to broaden access to
credit in a sustainable way, such as structured finance, factoring, credit guarantees, and
correspondent banking. Most of these experiences have led to financial innovation by
developing new financial products and coordinating different players in the financial and
real sectors to overcome barriers to access to credit.

The book provides a first systematic analysis of these innovative experiences, including an
analytical framework to understand problems of access to finance and a discussion of the
effects and optimal design of public interventions. Finally, the book discusses some open
policy questions about the role of the private and public sectors (including state-owned
banks) in broadening access to finance in a sustainable and market-friendly manner.

About this title

Review:

The role of government is among the most critical but also most controversial dimensions of financial sector development. This book is a thoughtful and important contribution to this debate, combining case studies across Latin America with a rigorous conceptual discussion. It is an important read for academics, policy makers, and other stakeholders in the financial sector. --Thorsten Beck, Professor of Banking and Finance, Cass Business School, London Research Fellow, CEPR; (Co-)Managing Editor, Economic Policy; Coeditor, Review of Finance

De La Torre, Gozzi, and Schmukler show that financial access for small and medium enterprises and low-income people isn t just humane, it is essential to empowering the people who drive growth and poverty reduction for everyone. They also show conceptually and with evidence drawn from recent experiences in Latin America that government has an active role to play, not in micromanaging the allocation of resources, but in solving coordination and risk-sharing problems that permit private institutions to broaden access efficiently. This book should be required reading for any course focusing on smart public policies to spur economic development. --Charles W. Calomiris, Henry Kaufman Professor of Financial Institutions, Columbia Business School

As someone who has long struggled with the question of what useful and effective ways there are for government to get involved directly in improving the access of small business to financial services, I found this book to be a valuable review of some fascinating success stories in Latin America. The authors have done a great job of creating a framework for their five case studies that takes good account of the literature. Plenty of food for thought here for financial sector policy makers. --Patrick Honohan, Former Governor, Central Bank of Ireland and Professor of International Financial Economics and Development, Trinity College Dublin

About this edition

• Publisher: World Bank Publications
• Publication date: 2017
• ISBN 10: 0821370804
• ISBN 13: 9780821370803
• Binding: Paperback
• Number of pages: 296