Mexico. Savings and Credit Sector Consolidation and Financial Inclusion Project

The objectives of the Savings and Credit Sector Consolidation and Financial Inclusion Project for Mexico are to support the: (a) consolidation of the savings and credit institutions (SCIs); and (b) deepening of financial inclusion in selected areas and selected locations. There are four components to the project, the first component being Consolidation and strengthening of savings and credit institutions.

This component provides training and technical assistance to strengthen savings and credit institutions; and provides training and technical assistance to the confederation, federations, self regulatory bodies, auxiliary supervision committees, and deposit protection funds to enhance their performance. The second component is the broadening access to financial services and products.

This component expands access to financial services through technical assistance to Savings and credit entities to increase their membership base; and expanding National Bank for Savings and Financial Services (BANSEFI's) client base through support from banking agents. The third component is the strengthening BANSEFI capacity. T

his component aims to expand the technological capacity of BANSEFI, including its platform's mainframe. Finally, the fourth component is the project management. This component provides technical assistance, training and material support to BANSEFI's staff and consultants in order to assist them in the implementation of the project.

World Bank. Document Date:  2011/10/31. Document Type:  Project Appraisal Document. Report Number: 63734. Volume No: 1 of 1

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Financial development: structure and dynamics

This paper analyzes the bright and dark sides of the financial development process through the lenses of the four fundamental frictions to which agents are exposed-- information asymmetry, enforcement, collective action, and collective cognition.

Financial development is shaped by the efforts of market participants to grind down or circumvent these frictions, a process further spurred by financial innovation and scale and network effects. The analysis leads to broad predictions regarding the sequencing and convexity of the dynamic paths for a battery of financial development indicators. The method used also yields a robust way to benchmark the financial development paths followed by individual countries or regions.

The paper explores the reasons for path deviations and gaps relative to the benchmark. Demand-related effects (past output growth), financial crashes, and supply-related effects (the quality of the enabling environment) all play an important role. Informational frictions are easier to overcome than contractual frictions, not least because of the transferability of financial innovation across borders.

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