El Salvador Financial Sector Assessment Program Development Module : Financial Inclusion
This Technical Note was prepared in the context of a World Bank Financial Sector Assessment Program mission in the Republic of El Salvador in March 2016. Despite the challenging economic environment, El Salvador has made significant strides towards...
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| Format: | Report |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2017
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| Online Access: | http://documents.worldbank.org/curated/en/403111487932558966/El-Salvador-Financial-sector-assessment-program-financial-inclusion http://hdl.handle.net/10986/26279 |
| Summary: | This Technical Note was prepared in the
context of a World Bank Financial Sector Assessment Program
mission in the Republic of El Salvador in March 2016.
Despite the challenging economic environment, El Salvador
has made significant strides towards a more inclusive
financial sector. However, El Salvador faces a number of
challenges, including regulatory weaknesses and uncertainty,
anti-competitive practices, and a fragile security situation
that impacts investment and innovation. The country still
presents low levels of access to and use of a range of
financial services. The financial sector is diversified, but
some challenges need to be overcome to increase competition
and innovation. There seem to be no excessive legal barriers
to entry for new banks and the framework allows for a
diverse range of large and small deposit-taking entities.
The microfinance sector is diverse and competitive and
reforms are underway to strengthen regulation and
supervision, but capacity is an issue. Also, the
microfinance prudential regulation should be improved to be
in line with international good practices and standards.
Reforms are needed to spur the use of electronic accounts
and transactions and to improve the draft rules for
simplified accounts. Further progress could be made by
allowing bank and nonbank financial institutions access to
and use of telecommunications infrastructure on a
non-discriminatory basis. An effective consumer protection
legal, regulatory and supervisory framework is needed to
ensure healthy financial inclusion. The Note contains
technical analysis underpinning the FSAP findings and
recommendations. Given the requested focus on digital
finance and consumer protection, certain areas relevant to
financial inclusion – notably small and medium enterprise
finance, financial education, microfinance regulation and
supervision– have been addressed in an abbreviated manner in
this Technical Note. Although this Note incorporates some
insights from the Technical Notes covering Financial
Infrastructure, Non-Bank Savings and Credit Institutions
(NBSCI) and Public Banks, not all related issues are
incorporated in this Note, so the other Technical Notes
should be read for a more comprehensive view of Salvadoran
financial inclusion. |
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