Publication: Financial Inclusion in Brazil : Building on Success
Date
2013-05
ISSN
Published
2013-05
Author(s)
International Monetary Fund
World Bank
Abstract
The development of a far reaching
correspondent banking network is one of the key factors
behind Brazil's success story in financial inclusion.
Between 2005 and 2011, the number of correspondents
approximately doubled to more than 160,000. The Central Bank
encouraged financial institutions to reach out to more
distant consumers and to communities where they had not
previously been active, including lower income areas,
through partnerships with a variety of retail establishments
including some with public ties such as the post office
network and lottery agencies. Regulators have gradually
reduced restrictions on correspondent banking, such as
individual approval processes, in response to early
successes with this program. The legal framework also
facilitated healthy expansion by putting the onus on
regulated institutions to train and monitor their
correspondents. This Technical Note (TN) does not include an
analysis of the causes underlying Brazil's continued
high credit cost but many of the issues discussed here may
be contributing factors. These include the lack of savings
and related dependence on credit which may reduce price
elasticity in credit markets; information asymmetries which
add to the cost of credit evaluation and increase risk for
lenders; and competition issues (as with mobile payments and
the so-called no-surcharge-rule on payment methods). The
Aide Memoire for the FSAP mission provides further
discussion of these important issues.
Citation
“International Monetary Fund; World Bank. 2013. Financial Inclusion in Brazil : Building on Success. © World Bank, Washington, DC. http://openknowledge.worldbank.org/handle/10986/16739 License: CC BY 3.0 IGO.”