Corporate Governance and Access to Finance - ESBG

CMAC play a complementary role to private commercial banks by lendingto segments that lack financial support. However, the increasedcompetition in the MES segment has led CMAC to also entering thetraditional banking segments of commercial and consumption credit.It seems natural that CMAC try to satisfy their clients‘ needs as theyimprove their standards of living. Offering services to other segments inthe market does not alter the cajas’ financial inclusion policies. The increasein commercial lending compared to MES in some cajas should not implya departure from their original function. Given that for CMAC the marginsof commercial loans are smaller than MES loans, cajas may reconsidertheir strategy and focus on their core business.It is noteworthy that CMAC provide access to finance both in the goodand in the bad times, whereas commercial banks retire when economicconditions worsen. Thus, CMAC supported their clients during “El Niño”and during the recent global crisis (although mild and short-lived in Peru)while banks tended to abandon the MES clients when conditionsdeteriorate. This anti-cyclical behaviour contributes to financial stability.According to the interviews with CMAC Arequipa, Piura and Sullana, theirclients recognize their support, and once they “mature” and are temptedby banks, they tend to remain loyal to the cajas. This confirms that onlyinstitutions with a vocation for MES foster financial inclusion permanently.A further contribution of CMAC to the Peruvian economy is that thecomposition of credit of CMAC is particularly centred on local currency,in a country where dollarisation is widespread (although showing a certaindeclining trend). CMAC have contributed to the de-dollarisation of thePeruvian financial system and therefore also to enhance financial stability.As in the case of the German savings banks, the regional principle initiallyapplied to CMAC, precluding them from competing in a region differentfrom their own. However, the wide regional income disparities and thedesire to reduce geographical concentration of risks led the SBS toauthorize the opening of branches in other geographical areas, includingLima Metropolitan, the biggest nationwide. This authorization has hadpositive effects, since it allows for better risk diversification and makes itpossible to extend financial services to a wider segment of small andmicro entrepreneurs. Furthermore, it has promoted lower interest ratesand the competition is now more dynamic in the micro finance market.150