World Bank Lending for Financial Inclusion

Abstract

The 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.