Corporate Governance and Access to Finance - ESBG

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nnEstablishing a direct and causal relationship between CorporateGovernance and Access to Finance is not straightforward, even though acorrelation between both seems to exist. A number of other factorsexplaining savings banks’ outreach also need to be taken into account.The degree of financial development of the market in which savingsbanks operate, the financial system infrastructure or the macro -economic environment are part of those key elements. Others, such asthe degree of competition in the financial sector, the types ofintermediaries, and the range of products and services they offer(as well as their main features and cost) do also condition the successof savings banks’ Access to Finance efforts.The statistical analysis suggests a positive correlation betweenCorporate Governance and Access to Finance both at the country level(chart A) and at the individual institutions’ level (chart B).• Chart A: combining indicators from previous studies 1 with our owndatabase, Corporate Governance seems to be correlated withAccess to Finance at the country level. Furthermore, when thecountry has a good Corporate Governance framework and WSBImembers have a higher market share in the country (shown by thesize of the dots), financial outreach tends also to be higher.• Chart B: Access to Finance indicators for individual WSBI memberswere also calculated, based on references traditionally used in theliterature: average deposit size, average loan size and deposits per1,000 adults. When comparing these indicators with a CorporateGovernance index defined for the purpose of this study, we foundthat, in the case of developing countries, there is a correlationbetween the quality of Corporate Governance and the three Accessto Finance indicators, stronger and more reliable in the case of theaverage deposit size.1 See section 5 for references.12
Chart A.Corporate Governance, Access to Finance and marketshare of WSBI members (country level)Source: Own elaboration. Afi, Analistas Financieros Internacionales. See Chapter 5 for definitions,data sources and data treatment.The Honohan Index measures the fraction of adult population using formal financial inter -mediaries. It varies between 0 and 1. The Country Corporate Governance level is measuredthrough a combination of indicators including the strength of legal rights, the depth of creditinformation and the level of financial development. The size of the dots reflects the marketshare of WSBI members in their respective banking system. The tendency line helps to visualisethe correlation between both variables.This chart suggests that in countries with a better CorporateGovernance environment and a relatively higher presence ofinstitutions with an Access to Finance mission (like WSBI members)financial outreach tends to be higher.13
Page 6 and 7: BoxesBox 1. German Sparkassen 27Box
Page 9 and 10: EXECUTIVE SUMMARYBackground and obj
Page 11: nnAccess to Finance in enshrined in
Page 15 and 16: nThe study also shows that Corporat
Page 17 and 18: 1. INTRODUCTION1.1. Focus and objec
Page 19 and 20: WSBI members are by definition acco
Page 21 and 22: For the particular case of developi
Page 23 and 24: 2. THE LINK BETWEENCORPORATE GOVERN
Page 25: Table 2. Main features of the Missi
Page 28 and 29: Access to financeSparkassen promote
Page 30 and 31: All these examples illustrate how p
Page 32 and 33: In the case of Peru, the profits th
Page 34 and 35: Among the WSBI institutions that re
Page 36 and 37: BOX 2. KENYA POST OFFICE SAVINGS BA
Page 38 and 39: The fact that the banking system is
Page 41 and 42: 3. CORPORATE GOVERNANCE -CONCEPTUAL
Page 43 and 44: Figure 2. Sound Governance of Finan
Page 45 and 46: As can be seen in the figure above,
Page 47 and 48: nnnAt the same time, the distance a
Page 49 and 50: The first two elements (the ownersh
Page 51 and 52: nHowever, this does not mean denyin
Page 53 and 54: Cooperatives are similar to mutuals
Page 55 and 56: 3.4. FoundationsFoundations do not
Page 57 and 58: 3.5. Good Corporate Governance prac
Page 59 and 60: F. DISCLOSURE AND TRANSPARENCYPrinc
Page 61 and 62: 4. ACCESS TO FINANCE -CONCEPTUAL FR
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4.1. Financial deepening and improv
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The board does not have any executi
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In other words, sustainable financi
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The following table shows how the W
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The fourth dimension refers to the
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Table 8. Access to Finance in the f
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Only 27 members established in 21 c
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nnDCI (Depth of credit information
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5.2. Corporate Governance and Acces
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5.2.1. Corporate Governance and Ave
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Chart 8.Specific Corporate Governan
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5.2.2. Corporate Governance and Ave
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Chart 13. Corporate Governance comp
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Chart 16. Corporate Governance Inde
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Chart 19. Specific Corporate Govern
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ANNEX 1: REVIEW OFTHE LITERATUREThe
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Even among the relatively narrow un
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Figure A.1. Structure of agents' re
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The table captures the essence of s
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A case study built by Clarke et al
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A very recent contribution to the d
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For example, in Latin America, WSBI
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The paper examines whether a poor e
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For the survival of microfinance in
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ANNEX 2: CASE STUDIES 32CASE STUDY
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It is one of the major characterist
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Although Sparkassen are legally and
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Figure A.2. Corporate Loans Market
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Financial education is also an impo
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Corporate GovernanceKPOSB is wholly
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Among the initiatives that the gove
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Related to the concession of credit
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OPERATIONS1. Deposit Base: It was p
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Corporate GovernanceThe Central Ban
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To address the problem of capital,
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Financial inclusion ranges very hig
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CASE STUDY 4:SPANISH SAVINGS BANKS
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The uniform financial regulation of
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Figure A.3. Governing Bodies - Span
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The web-based tool www.rededucacion
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On the liability side, CMAC offer m
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A specificity of CMAC is that the m
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Table A.3.MissionMissionCMAC AREQUI
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As of September of 2009, the twelve
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Furthermore, the consensus culture
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ANNEX 3: QUESTIONNAIREQUESTIONI. Ge
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ANNEX 4:THE HONOHAN INDEX 43COMPOSI
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COMPOSITE MEASURE OF ACCESS TO FINA
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ANNEX 5:QUANTITATIVE RESULTSCountry
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Overall Corporate Governance IndexO
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REFERENCES- Andrianova, S., Demetri
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- FSD Kenya (2009), Financial Secto
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- World Bank (2006) The Role of Pos
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WSBI - ESBG - The Global Voice of S
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