Innovative Experiences in Access to Finance: Market-Friendly Roles for the Visible Hand? (Latin American Development Forum)

Augusto de la Torre

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Interest in access to finance and awareness of its importance have increased significantly
since the early 2000s. Growing evidence suggests that lack of access to credit prevents
many households and firms from financing high-return investment projects, which has an
adverse effect on growth and poverty alleviation. Despite the increasing awareness of the
importance of access to finance among both researchers and policymakers, there are still
some major gaps in our understanding of the main drivers of access, as well as about the
impact of different policies in this area.

This book aims to fill some of these gaps by discussing recent innovative experiences in
broadening access to credit in Latin America. These experiences are consistent with an
emerging new view that, while recognizing the central role of the public sector in improving
the contractual and informational environment for financial markets, also contends that
there might be room for well-designed, restricted interventions in collaboration with the
private sector to foster the development of financial markets and broaden access to them.
In particular, the book analyzes, among other things, some interesting experiences from
Brazil, Chile, Colombia, and Mexico that use different instruments to broaden access to
credit in a sustainable way, such as structured finance, factoring, credit guarantees, and
correspondent banking. Most of these experiences have led to financial innovation by
developing new financial products and coordinating different players in the financial and
real sectors to overcome barriers to access to credit.

The book provides a first systematic analysis of these innovative experiences, including an
analytical framework to understand problems of access to finance and a discussion of the
effects and optimal design of public interventions. Finally, the book discusses some open
policy questions about the role of the private and public sectors in broadening access to finance in a sustainable and market-friendly manner.