Corporate Governance and Access to Finance - ESBG

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Table 1. General characteristics of the five selected Case StudiesGermany Kenya Peru Philippines SpainType of Institutions Saving Banks Postal Bank Saving Banks Postal Bank Saving BanksOwner Municipalities Government Municipality Post Corporation Created byare the “Traeger” of Kenya a private foundation(responsible (no owner)institution)(except 6)Supervision by Yes No, Ministry Yes Yes YesCentral Bank of FinanceNumber of institutions 430 1 12 1 46Market share 31,6 %** 3% 4% 0.1% 50%(% total deposits)*Provision of Credit Yes No Yes Yes YesWorld Bank country OECD Low income Upper middle Low upper middle OECDclassification (income) country (LIC) income country income country(MIC) (LUC)* Source: based on Access to Finance questionnaire distributed by WSBI to all members. For the Philippines’ case, market share is measured as percentage oftotal assets.** Savings banks only; the figure is 41.1% if other members of the network are included.22
2. THE LINK BETWEENCORPORATE GOVERNANCEAND ACCESS TO FINANCEThe initial objective of Corporate Governance principles is to align theincentives of managers and shareholders in order to overcome the principal– agent problem. This approach, however, assumes that shareholders’interest is to maximize profits. In the case of financial institutions,“Corporate Governance should take account of the interest of otherstakeholders (depositors, savers, life insurance policy holders, etc)” 5 , andthe objectives of the institution need to be defined more precisely, giventhe broader impact of its activities on economic development, financialstability and social cohesion. This is particularly relevant for institutionshaving a financial inclusion objective, like WSBI member banks.This section provides an overview of the main potential interactions andmutual influences between Access to Finance and Corporate Governance,as applied in financial institutions such as savings banks. A series ofpossible links are examined and good practices are identified, withparticular regard to:(i) the importance of the mission of the institution, and the impact onits proximity banking vocation as well as its translation into productsdesigned to foster financial outreach;(ii) the anticyclical behaviour of proximity banking through the longterm commitment with its clients;(iii) the broader contribution to the welfare of the community throughthe use of profits for community projects;(iv) the mechanisms to ensure accountability to stakeholders; and(v) the role of financial regulation and supervision.5 See EU Commission (2010).23
Page 6 and 7: BoxesBox 1. German Sparkassen 27Box
Page 9 and 10: EXECUTIVE SUMMARYBackground and obj
Page 11 and 12: nnAccess to Finance in enshrined in
Page 13 and 14: Chart A.Corporate Governance, Acces
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: For the particular case of developi
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
Page 63 and 64: 4.1. Financial deepening and improv
Page 65 and 66: The board does not have any executi
Page 67 and 68: In other words, sustainable financi
Page 69 and 70: The following table shows how the W
Page 71 and 72: 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
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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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