Corporate Governance and Access to Finance - ESBG

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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
Table A.3.MissionMissionCMAC AREQUIPACMAC PIURACMAC SULLANACMAC TRUJILLOCMAC CUSCOTo benefit segments of the population lacking financial support oftraditional banking, thus promoting growth, development and labourin the Arequipa community.To provide financial services with efficiency, timeliness andcompetitiveness, both to small and micro enterprises (SME) andto families who normally do not have access to the banking system,by encouraging their self-sustainable development, based on savingand self-help.Profitable microfinance institution, focused on providing timely andquality services.To improve the quality of life of the population, through innovativeand excellent financial services and advanced technology.To promote socio-economic development, promoting saving andgrowth of the micro and small enterprise sector with quality ofservice, undertaking the commitment to improve the welfare of ouremployees, creating value for shareholders, customers and thecommunity at large.The mission of CMAC is to contribute to the development of the community,where MES are the predominant form of enterprise and therefore theirnatural clients. The clear specification of financial inclusion objectives inthe mission is a factor that explains their perseverance in following thisendeavour. CMAC have been very successful in mobilizing the lending tomicro entrepreneurs from the very beginning despite the adverse nationaleconomic climate in the early 1980s. CMAC have granted more than653 million euros in loans to MSME and 322 million euros in loans toindividuals. As stated above, CMAC have played an active role in thedevelopment of the microfinance business industry, being the very firstformal/supervised financial institutions massively providing microcredit inthe country in a sustainable way.A further measure of the success of cajas is the recent dramatic increaseof competition in the MES segment, partly related to the “demonstrationeffect” of the good results obtained by CMAC, which has attractedother entrants: CRACs (Cajas Rurales de Ahorro y Credito), Edpymes(Entidades de Desarrollo para la Pequeña y Microempresa) and bankshave aggressively entered this segment, as a result of which CMAC havefaced a severe competition.149
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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
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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
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 and 134: To address the problem of capital,
Page 135 and 136: Financial inclusion ranges very hig
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: A specificity of CMAC is that the m
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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