Innovative Experiences in Access to Finance: Market Friendly Roles for the Visible Hand?

This paper identifies various factors contributing to the study of financial development:

• Expansion of access may reduce poverty;
• Arguments about the channels through which financial development may lead to growth often include access related stories;
• There is a sheer lack of access to financial services in emerging economies.

The paper aims at filling the gaps in emerging literature by addressing specific issues related to access to finance. The objectives are:

• Discussing some conceptual issues in access to finance;
• Describing some recent experiences to broaden access to credit.

With views like the following, it addresses the question whether government intervention to foster financial development and broaden access is necessary and in what form:

• Interventionist view;
• Laissez-faire view;
• Pro-market activism view describing a number of recent experiences in Latin America.

The paper concludes with some open policy questions about the role of the public and private sectors in driving these financial innovations:

• Whether idiosyncratic experiences can lead to more general policy guidelines;
• The necessity to rethink some institutional features of development-oriented financial institutions to ensure that pro-market interventions succeed in fostering private financial intermediation and broadening access;
• The need for research to understand how to minimize the unintended consequences of pro-market interventions;
• Whether pro-market interventions are just short term solutions to broaden access while institutions take time to build, or if there is role for these interventions even in countries with a good enabling environment.