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World Bank Lending for Financial InclusionThe purpose of the paper is to present a
 more granular view of such projects through the in-depth
 focus on a limited number of case studies, with a view to
 understanding what factors in the design of such lending
 have helped achieve objectives of expanded access, and what
 forms of interventions may have been less successful. It
 examines the nature of Bank lending vehicles, the partnering
 borrower institutions, the country environments in which its
 loans were extended, as well as broader elements of good
 practice that make for loan success. It examines the
 beneficiaries targeted and results achieved. It aims to
 draws lessons that suggest what factors could lead to
 success or failure in Bank operations focused on financial
 access. The remainder of the paper is organized as follows:
 section two briefly describes the set of the Bank s projects
 selected for detailed review. Sections three to six contain
 the core findings of the review. Section 3 focuses on
 alternative forms of borrower institutions that have served
 as vehicles for Bank projects, particularly, public sector
 banks, apex bank structures that include the private sector,
 rural banks, nonbanks, non-governmental organizations (NGOs)
 and microfinance institutions, in terms of the degree to
 which the Bank has been able to successfully partner with
 such institutions to expand financial access. It also looks
 at alternative forms of Bank loan design, policy-based
 loans, investment loans and lines of credit, Learning and
 Innovation Loans (LILs), matching grants, technical
 assistance and combinations thereof, and reviews evidence on
 the role of loan structure (including partnerships with
 other donors/lenders) and project success. Section four
 considers the effect of the broader business environment, in
 terms of financial regulation. Section five reviews elements
 of good practice that have contributed to success in lending
 that could be applicable to loans with any objective, and
 examines their application in the present context. Section
 six tries to construct a bottom line, reviewing available
 evidence on outcomes and impact; especially in terms of the
 ultimate beneficiaries reached. Section seven, the final
 section, summarizes the main messages emerging from the
 review and concludes with observations about ways forward.
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Finance for All? Policies and Pitfalls in Expanding AccessThis book, finance for all, presents first efforts at developing indicators illustrating that financial access is quite limited around the world and identifies barriers that may be preventing small firms and poor households from using financial services. Based on this research, the report derives principles for effective government policy on broadening access. The report's conclusions confirm some traditional views and challenge others. For example, recent research provides additional evidence to support the widely-held belief that financial development promotes growth and illustrates the role of access in this process. Improved access to finance creates an environment conducive to new firm entry, innovation, and growth. However, research also shows that small firms benefit the most from financial development and greater access-both in terms of entry and seeing their growth constraints relaxed. Hence, inclusive financial systems also have consequences for the composition and competition in the enterprise sector. This report reviews and synthesizes a large body of research, and provides the basis for sound policy advice in the area of financial access. The findings in this report also underline the importance of investing in data collection: continued work on measuring and evaluating the impact of access requires detailed micro data both at the household and enterprise level.
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Expanding Access to Finance : Good Practices and Policies for Micro, Small, and Medium EnterprisesThis book on micro, small, and medium enterprise (MSME) finance is intended primarily for government policy makers. It presents a policy framework whereby governments can support increased access by MSME to financial services based on empirical evidence and practices. MSME complain that lack of access to finance constrains their growth and competitiveness. Indeed, financial sector policies often work against the ability of commercial financial institutions to serve MSME, albeit often unintentionally. In many countries, lack of competition in the banking sector limits pressure on banks to reach out to MSME client segments. High risk and high transaction costs-real or perceived-associated with bank lending to MSME likewise constrain access. Often, supervisory and capital adequacy requirements penalize banks for lending to enterprises that lack traditional collateral. Attempts by governments to address these constraints and offset the inequalities in financial sector policy generally have not achieved the desired results. This book lays out a market-based policy framework for governments that focuses on delivery of financial services to MSME on commercial terms. The framework guides governments in focusing scarce resources on developing an inclusive financial sector policy; building sound financial institutions; and investing in a supportive information infrastructure, such as credit bureaus and accounting standards. Examples from around the world illustrate how such a strategy has helped build more inclusive financial systems for all.