Corporate Governance and Access to Finance - ESBG

In the case of Peru, the profits that are distributed to the municipalitiesshould be spent on infrastructure projects, although there are in generalno specific mechanisms to ensure the enforcement of this rule.The use of the profits of savings banks in projects improving the welfareof the community is a means of reinforcing the roots of the institutionand enhancing the visibility of its social function. After ensuring the longtermsustainability of the institution, it is natural that these profits (that are aresult of the use of the community’s resources) revert to the community.After this crisis, the perception of an excessive reliance of financial institutionson taxpayer’s support strengthens the case for a social use of banks’ profits.Chart 2. Virtuous circle between Access to Finance and socio -economic development: the double-sided contributionof WSBI membersSource: Own elaboration. Afi, Analistas Financieros Internacionales.Furthermore, contributing to the development of the community isanother way to fuel the virtuous cycle between financial inclusion andfinancial development. On top of their contribution to financial inclusion,through their day-to-day business, WSBI members promote directlyeconomic development, which in turn stimulates financial inclusion,thus accelerating the mutual feedback between both objectives.32