Corporate Governance and Access to Finance - ESBG

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The Post Office has 2,817 branches, 25 of which are used as PPSB branches.There are two reasons for this. First, there is an IT connectivity problem inthe post network. And second the fact that PPSB capital is consideredinsufficient by the Central Bank blocks expansion in practice. This situationimplies that PPSB does not benefit from what is normally considered asthe main advantage of postal banks, namely the capillarity of the postalnetwork. This has also significant implications for the access to financepolicies, which are constrained by this limited penetration of the network.The limited number of ATMs (32, 25 of which are in the branches) doesnot contribute to provide local and regional outreach either.For the PPSB to be able to use the post office network, it would first needto find a solution to the capital increase problem. The plan is alsodependant on the Central Bank forthcoming regulation on “third partyentities as agent banks”, which includes a reference to the Postal network:“government-owned post offices form part of the Bangko Sentral ngPilipinas financial inclusion scheme” 40 . According to interviews with thecentral bank, this regulation will probably relax the conditions for the useof agents, which may benefit the outreach capacity of PPSB.This regulation also considers building the policy framework that willallow thrift and rural banks to network with retailers such as 24-hourconvenience stores, particularly those based in provinces. This frameworkwill help to service underserved areas in the country that have yet to bereached by banks that tend to operate in highly urbanized areas.The financial inclusion strategy of the Central Bank includes other optionslike tapping third-party entities such as sari-sari stores (conveniencestores) to act as bank agents in the use of electronic cash transfers.Under this plan, sari-sari stores will be allowed to act as cash centreswhere Filipinos can buy or cash e-money. It is important to bear in mindthat the Philippines is one of the leading countries in the world in the useof e-money and M-Banking, along with Kenya and South Africa. The planwill also include big chain stores. This scheme seeks to provide everyFilipino access to financial services, which now are hardly accessible bythose in rural areas.40 BSP Regulations in the Pipeline, Updates on BSP Supervised/Regulated FinancialInstitutions, Bangko Sentral Ng Pilipinas, Supervision and Examination Sector, September2009.134
Financial inclusion ranges very high among the priorities of the country’sfinancial policies. The Central Bank considers M-Banking as one of themain lines of action in this strategy, hence its favourable regulatorytreatment. PPSB, due to its limited outreach and small size, is howevernot seen by the authorities as a very important instrument in financialinclusion policies.PPSB does not see itself as an institution specialised in either saving orlending products, having both the same importance. The institution,besides offering deposits (both in Philippines pesos and in dollars) andconsumer and commercial loans, offers products related to access tofinance. The latter include a micro-finance program, loans, remittances,and provision of credit to small and medium enterprises, in particular inthe transport sector (the Post depends on the Transport Ministry, hencethe connection). There is a special Government Fund of PHB 0.5 billion(USD 11 million) for the transport sector channelled through PPSB. As anexample, PPSB has a special line of credit for financing the purchase of“Jeepneys”, the most popular means of transportation in the countryand a typical sector for SME.PPSB depends excessively on government deposits, a source of activitythat is neither particularly related to financial inclusion, nor sustainable inthe long term, to the extent that countries in the process of financialdeepening tend to liberalise these deposits at a certain stage ofdevelopment. Without this advantage, PPSB viability would be questioned.Link between Corporate Governance and Access to FinanceThe divide between success and failure in promoting sound corporategovernance and access to finance depends largely on the strength of aclear policy and a strong political commitment. Aware of this, the CentralBank has developed an integrated and comprehensive vision and policyfor the financial sector that takes into account the current situation andthe role of the different players as well as the benefits for the low-incomepopulation. The strategies of the central bank concerning corporategovernance and access to finance are however relatively independent:the first is aimed at ensuring adequate risk control and transparencywhereas the second focuses on the use of new technologies to reduceintermediation costs.135
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BoxesBox 1. German Sparkassen 27Box
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EXECUTIVE SUMMARYBackground and obj
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nnAccess to Finance in enshrined in
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Chart A.Corporate Governance, Acces
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nThe study also shows that Corporat
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1. INTRODUCTION1.1. Focus and objec
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WSBI members are by definition acco
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For the particular case of developi
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2. THE LINK BETWEENCORPORATE GOVERN
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Table 2. Main features of the Missi
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Access to financeSparkassen promote
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All these examples illustrate how p
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In the case of Peru, the profits th
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Among the WSBI institutions that re
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BOX 2. KENYA POST OFFICE SAVINGS BA
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The fact that the banking system is
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3. CORPORATE GOVERNANCE -CONCEPTUAL
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Figure 2. Sound Governance of Finan
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As can be seen in the figure above,
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nnnAt the same time, the distance a
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The first two elements (the ownersh
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nHowever, this does not mean denyin
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Cooperatives are similar to mutuals
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3.4. FoundationsFoundations do not
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3.5. Good Corporate Governance prac
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F. DISCLOSURE AND TRANSPARENCYPrinc
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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
Page 84 and 85: Chart 8.Specific Corporate Governan
Page 86 and 87: 5.2.2. Corporate Governance and Ave
Page 88 and 89: Chart 13. Corporate Governance comp
Page 90 and 91: Chart 16. Corporate Governance Inde
Page 92 and 93: Chart 19. Specific Corporate Govern
Page 95 and 96: ANNEX 1: REVIEW OFTHE LITERATUREThe
Page 97 and 98: Even among the relatively narrow un
Page 99 and 100: Figure A.1. Structure of agents' re
Page 101 and 102: The table captures the essence of s
Page 103 and 104: A case study built by Clarke et al
Page 105 and 106: A very recent contribution to the d
Page 107 and 108: For example, in Latin America, WSBI
Page 109 and 110: The paper examines whether a poor e
Page 111 and 112: For the survival of microfinance in
Page 113 and 114: ANNEX 2: CASE STUDIES 32CASE STUDY
Page 115 and 116: It is one of the major characterist
Page 117 and 118: Although Sparkassen are legally and
Page 119 and 120: Figure A.2. Corporate Loans Market
Page 121 and 122: Financial education is also an impo
Page 123 and 124: Corporate GovernanceKPOSB is wholly
Page 125 and 126: Among the initiatives that the gove
Page 127 and 128: Related to the concession of credit
Page 129 and 130: OPERATIONS1. Deposit Base: It was p
Page 131 and 132: Corporate GovernanceThe Central Ban
Page 133: To address the problem of capital,
Page 137 and 138: CASE STUDY 4:SPANISH SAVINGS BANKS
Page 139 and 140: The uniform financial regulation of
Page 141 and 142: Figure A.3. Governing Bodies - Span
Page 143 and 144: The web-based tool www.rededucacion
Page 145 and 146: On the liability side, CMAC offer m
Page 147 and 148: A specificity of CMAC is that the m
Page 149 and 150: Table A.3.MissionMissionCMAC AREQUI
Page 151 and 152: As of September of 2009, the twelve
Page 153 and 154: Furthermore, the consensus culture
Page 155 and 156: ANNEX 3: QUESTIONNAIREQUESTIONI. Ge
Page 157 and 158: ANNEX 4:THE HONOHAN INDEX 43COMPOSI
Page 159 and 160: COMPOSITE MEASURE OF ACCESS TO FINA
Page 161 and 162: ANNEX 5:QUANTITATIVE RESULTSCountry
Page 163 and 164: Overall Corporate Governance IndexO
Page 165 and 166: REFERENCES- Andrianova, S., Demetri
Page 167 and 168: - FSD Kenya (2009), Financial Secto
Page 169 and 170: - World Bank (2006) The Role of Pos
Page 172: WSBI - ESBG - The Global Voice of S
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