World Bank - Grant Funding Request (GFR)

Transcription

1 GFR KCP - ACCESS TO BANKING SERVICES IN MEXICO Team Leader : Ms Miriam Bruhn Summary Information Status TF Number/Status Estimated Grant Start Date/ Closing Date Grant Amount Beneficiary Country Implemented by Grant linked to Disbursing Fund Type TF Usage Managing Unit Responsible Cost Center Window Manager Funding Window Sub-Fund Trustee Donor Coterminus Staff Assignment Approved TF LCLS 06/15/2008 To 03/31/ , USD Mexico Bank Executed P Access to Banking Services in Mexico Project Status : ACTV Product Line : RF Project/activity support TA - TECHNICAL ASSISTANCE & ADVISOR DECFP DECFP Mr Ivar Cederholm KCP-INVESTMENT CLIMATE AND TRADE AND INTERGRATION TRUST FUND TFS KCP-INVESTMENT CLIMATE AND TRADE AND INTERGRATION TRUST FUND TF The Investment Climate and Trade and Integration Trust Fund TF MULTIPLE DONORS No This GFR includes the following sections: Basic Data Info, Basic Data - TTL Comment, Description, Project Information, Disbursement, Financing, Confirmation, Processing, Attachments. Internal Bank Report Page 1 of 6

2 Comments/Requests by TTL DESCRIPTION 1. What is the Development Objective (or main objective) of this Grant? operational at the time. Overnight, Banco Azteca established the second largest network of branches in the country. This set a world record of a bank opening more than 800 branches at once. Another interesting feature of Banco Azteca was that it catered to low-income groups which had traditionally had less involvement with commercial banks. This study would exploit the within-county variation in the opening of Banco Azteca branches to identify its effects, which allows us to establish causality more convincingly than cross-country studies. The results of this study would benefit policy makers since they will illustrate what the effects are of promoting financial access for low-income groups. Recently, more banks like Banco Azteca have opened in Mexico, such as Wal-Mart Bank, and Banco Azteca has expanded to different countries, such as Peru. Granting licenses to these banks has been somewhat controversial since it encountered some resistance from the public and interest groups. In the US, Wal-Mart has not been able to obtain a banking license due to opposition from community banks. It is thus important to provide evidence on the impact of opening such banks on the banking market and on economic outcomes to inform policy makers' decisions on granting licenses. branches were opened in all pre-existing department stores that were This grant has two development objectives. The first is to identify the causal effect that extending banking services to low-income individuals has on economic outcomes, such as entrepreneurial activity, growth, and poverty within a country. The second is to study the impact that adding a new bank with a large branch network has on the banking market. Recent research has suggested that increased access to finance fosters economic growth and poverty alleviation. Most existing studies investigate the link between access to finance and development outcomes in a cross-country framework. We are not aware of any study that started banking operations under the name of Banco Azteca. Bank goods Grupo Elektra obtained a banking license and in October 2002 it In March 2002 the popular Mexican retailer of electronics and household Mexico. estimating the effect of expanding the supply of banking services in particular country. This project proposes to fill this gap by simultaneous opening of a large number of new branches within a measures the effects of an expansion of access to finance through the 2. Summary description of Grant financed activities outcomes on the municipal level, such as households' ability to start Bancaria y De Valores). Second, we will collect data on economic Mexican bank supervision commission, the CNBV (Comission Nacional deposits), the number of credit cards, and loan amounts, from the number of deposit accounts (broken down to checking, savings, and time data on a variety of bank outcomes, such as the number of branches, the in this project. First, we will make use of quarterly municipal-level cleaning, and data management. We will use two different types of data new businesses, economic activity (investment in productive assets), growth and poverty. The economic outcomes studied will depend on the data availability. Although we have some preliminary data from the CNBV, this data needs to be cleaned up, which involves working with the CNBV to correct for the specific inconsistencies. In the process of data cleaning, the consultant would act as a liaison with the CNBV and other bank officials. The deliverables of this Grant will be two research papers. The first paper will report on the impact of the added branches on the banking market, looking at a variety of bank outcomes, such as the number of branches, the number of deposit accounts (broken down to checking, savings, and time deposits), the number of credit cards, and loan amounts. The second paper will report on the impact of the supply shift of banking services on a variety of economic Internal Bank Report Page 2 of 6

3 outcomes on the municipal level. We will study the impact on households# ability to start new businesses, on economic activity (investment in productive assets), on who will be responsible for background research, data collection, data KCP funding is being sought to finance a Spanish-speaking consultant websites (such as Doing Business and FPD). viewpoint report which will be widely disseminated through World Bank data availability. In addition we will produce a non-technical growth and on poverty. The economic outcomes studied will depend on the 3. (Optional question) What can/has been done to find an alternative source of financing, i.e. instead of a Bank administered Grant? 4. What are the main risks related to the Grant financed activity? Are there any potential conflicts of interest for the Bank? How will these risks/conflicts be monitored and managed? of sources. assistant to research data availability and collect data from a variety rather small. The risks will be mitigated by hiring a research will allow us complete at least 75% of the project, so the risks are all desirable economic outcomes. However, the data we already possess investment. Availability of such data might hamper our ability to study level data on other economic outcomes, such as poverty, growth, and entrepreneurship and income. We hope to get additional municipality will allow us to examine the impact of the supply shift on Labor Market survey (ENE Encuesta Nacional de Empleo). This data set We have some data for the second paper, specifically data from Mexican this report (studying the impact on the banking sector) from the CNBV. availability. We already have the data we need for the first part of The successful implementation of this project depends on the data FINANCING Is retroactive financing required? No Retroactive Financing Date: Justification for Retroactive Financing: Transfer Schedule Amount in Grant Curr Condition 07/02/ , /02/ , Comment on Transfer Condition: DISBURSEMENTS Disbursement Summary in USD Date From Date To Amount in USD Amount in USD RELATED PROJECT INFORMATION Basic Project Information Internal Bank Report Page 3 of 6

4 Project Definition Project Description Project Type Region/Cty Status Company code Team Leader P Access to Banking Services in Mexico RF-Research Services MX-Mexico Active IBRD Ms Miriam Bruhn Project Description We propose to write two papers that will study the impact of this increase in the supply of banking services on the Mexican economy. In the first paper, we will study the impact of the added branches on the banking market, looking at a variety of bank outcomes, such as the number of branches, the number of deposit accounts (broken down to checking, savings, and time deposits), the number of credit cards, and loan amounts. In the second paper, we will study the impact of this supply shift on a variety of economic outcomes on the municipal level. We will study the impact on households' ability to start new businesses, on economic activity (investment in productive assets), on growth and on poverty. The economic outcomes studied will depend on the data availability. The papers will be submitted to the World Bank Policy Working Paper series, available on our program website, and will be submitted to academic journal for publication. The results will also be presented at seminars and research and policy conferences. The non-technical viewpoint report will be widely disseminated through World Bank websites (such as Doing Business and FPD). This project has two development objectives. The first is to identify the causal effect that extending banking services to low-income individuals has on economic outcomes, such as entrepreneurial activity, growth, and poverty within a country. The second is to study the impact that adding a new bank with a large branch network has on the banking market. The deliverables will be two research papers. The first paper will report on the impact of the added branches on the banking market, looking at a variety of bank outcomes, such as the number of branches, the number of deposit accounts (broken down to checking, savings, and time deposits), the number of credit cards, and loan amounts. The second paper will report on the impact of the supply shift of banking services on a variety of economic outcomes on the municipal level. We will study the impact on households' ability to start new businesses, on economic activity (investment in productive assets), on growth and on poverty. The economic outcomes studied will depend on the data availability. In addition we will produce a non-technical viewpoint report which will be widely disseminated through World Bank websites (such as Doing Business and FPD). The results of this study would benefit policy makers since they will illustrate what the effects are of promoting financial access for low-income groups. Recently, more banks like Banco Azteca have opened in Mexico, such as Wal-Mart Bank, and Banco Azteca has expanded to different countries, such as Peru. Granting licenses to these banks has been somewhat controversial since it encountered some resistance from the public and interest groups. In the US, Wal-Mart has not been able to obtain a banking license due to opposition from community banks. It is thus important to provide evidence on the impact of opening such banks on the banking market and on economic Internal Bank Report Page 4 of 6

5 outcomes to inform policy makers' decisions on granting licenses. Project Milestones Usage Description Basic Forecast Actual AIS Sign-off (B) 07/28/ /21/ Activity Implementation Start (B) 07/28/ Draft to Director (N) 03/31/ Paper to Director (Y) Paper to VP (Y) VP Meeting (Y) Paper to MD (Y) Completion/Director Approval (N) 06/30/ Board Approval (Y) ACS (B) Publication (N) Project Financing Total Cost 0.00 Finance 0.00 Financing Gap 0.00 Source Amount Financed BORR 0.00 CHECKLIST The agreement governing the use of funds under this Donor fund requires, inter alia, that: I understand the the trust fund should be managed in accordance with Bank and trust fund guidelines and procedures. Any change in the scope of the described tasks outlined in the proposal will be discussed with the KCP Program Manager. I acknowledge that I have read the KCP Charter. Finally, I agree to provide annual progress reports, and within 30 days of completion of the project, a full and comprehensive completion report. Both the progress and completion reports (unedited) will be included in the KCP Annual Report and posted in the KCP website. As Task Team Leader (TTL) for this grant, I confirm that the activities this grant will finance and the proposed use of grant funds comply with the above requirements. Ms Miriam Bruhn on 06/05/2008 As Window Manager for this grant, I confirm that the activities this grant will finance and the proposed use of grant funds comply with the above requirements. Mr Ivar Cederholm on 08/04/2008 PROCESSING Cleared/Approved by UPI Name Date Action Team Member Team Leader Ms Miriam Bruhn 06/05/2008 Submitted Internal Bank Report Page 5 of 6

6 Reviewer Mr Joseph Michael Welch 05/16/2008 Cleared Manager Ms Asli Demirguc-Kunt 05/16/2008 Cleared Sector Director Mr Martin Ravallion 05/16/2008 Cleared Window Manager Mr Ivar Cederholm 08/04/2008 Approved Program Manager Mr Jaime G. Olazo TACT DOCUMENTS ATTACHED Application Form - Knowledge for Change Program highlighted_v5.doc Internal Bank Report Page 6 of 6