Corporate Governance and Access to Finance - ESBG

There are other creative ways to limit political intervention. According toCaja Piura, a good understanding of the objectives of the caja by theMunicipality serves two important goals. On one hand, it focuses theactivities of the CMAC, and on the other hand, it helps to preventpolitical interference. In addition, this caja promotes financial educationamong staff, management and owners (municipality).Being subject to public procurement rules is an important shortcoming ofCMAC. These rules limit savings banks’ competitiveness vis-à-vis banksand introduce a layer of complexity in CMAC’s daily operations. This issuehas been raised to the attention of the Peruvian Congress, where a lawon competitiveness improvement is under study. CMAC are also at adisadvantage to attract and retain the human talent needed to run thebusiness, as a consequence of the limits on remuneration. To compensateemployees CMAC have implemented generous training policies thatfurther benefit the institution.Compared to banks, CMAC have a higher cost of deposits. This is dueto the prohibition to CMAC to offer current accounts, which have alower rate as well as to the struggle of smaller CMAC to get funding.The removal of this prohibition will improve the level playing field forcajas and banks. CMAC have also higher capital requirements thancommercial banks (14 percent against 9 percent), which exacerbates theproblem of recapitalisation.Access to FinanceThe mission of CMAC is undoubtedly related to fostering financial inclusion(see table below with the mission of selected CMAC). The General Lawof the Financial System defines CMAC as entities that obtain resourcesfrom the public and whose specialty consists on lending to micro andsmall enterprises.148