Corporate Governance and Access to Finance - ESBG

Financial sector policies that encourage competition, provide the rightincentives, and help overcome access barriers are central to attaining theabovementioned objectives.A financial system that lacks penetration beyond the higher incomesegments of population forces the majority of people to rely on less efficient,riskier and more expensive informal financial channels. WSBI memberscontribute to enhance formal access to financial services. This is the casefor example through microfinance activities, which represent a significantpart of savings banks’ business, especially in Latin America, where threeWSBI members have been forerunners of the microfinance industry intheir respective countries: Banco BCSC, formerly Banco Caja Social,in Colombia, the Cajas de Crédito, represented by FEDECREDITO in ElSalvador and CMACs in Peru (see Box 4) 17 .BOX 5. CAJAS MUNICIPALES DE AHORRO Y CRÉDITO(CMACS) IN PERUCorporate GovernanceThe supreme decree that regulates CMACs establishes asgoverning bodies the board of directors and the joint management.A very interesting feature of CMACs is that despite having onlyone shareholder (the Municipality), the appointment process ofthe Board of Directors involves different stakeholders. Thus, theboard consists of seven members: three elected by municipalrepresentatives (two elected by the majority and one by theminority, neither of them town councillors), one from the CatholicChurch, another from the Chamber of Commerce, and anotherfrom COFIDE (Corporación Financiera de Desarrollo, a second tierpublic bank) and finally one from the local association ofentrepreneurs representing the MSME business sector. This pluralitylimits political interference since the board represents the interest ofdifferent stakeholders, acting as checks and balances mechanism.17 For more information on WSBI members’ microfinance activities see Perspectives 59,July 2009 Beyond Microcredit: the role of savings banks in microfinance.www.wsbi.org/uploadedFiles/Publications_and_Research_(ESBG_only)/PERSPECTIVES%2059%20finallowres.pdf.64