Colombia - Financial Sector Assessment
State-owned financial institutions (SOFIs) and broader interventions by the state need to play a more prominent role in supporting financial inclusion, green activities and fostering competition among private financial providers. While SOFIs have b...
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| Format: | Working Paper |
| Language: | English |
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World Bank, Washington, DC
2022
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| Online Access: | http://documents.worldbank.org/curated/en/099010004112241518/P17314204e921c0430aacb0c320cb7f9e13 http://hdl.handle.net/10986/37312 |
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okr-10986-373122022-04-19T05:10:38Z Colombia - Financial Sector Assessment IMF World Bank STATE-OWNED FINANCIAL INSTITUTIONS (SOFIS) STATE LENDING PUBLIC CREDIT SUPPORT POLICIES INTEREST RATE CONTROLS FINANCIAL SECTOR ASSESSMENT FINANCIAL INCLUSION GOVERNANCE OF STATE-OWNED FINANCIAL INSTITUTIONS FINANCIAL TRANSPARENCY COMMERCIAL LENDING COMMERCIAL BANKING INSOLVENCY FRAMEWORK State-owned financial institutions (SOFIs) and broader interventions by the state need to play a more prominent role in supporting financial inclusion, green activities and fostering competition among private financial providers. While SOFIs have been generally perceived as complementary to the private sector, their recent incursion into direct lending and commercial activities could raise competitive neutrality considerations, if subsidies are involved. Improving product design, incorporating best practices, strengthening governance, and continuing to improve risk management would support expansion of SOFIs activities in a non-distortionary way. Interventions could be better coordinated to improve efficiency, avoid duplication, and ensure alignment with policy objectives. The formalization of Grupo Bicentenario should contribute to these objectives. Monitoring and evaluation (M&E) of public credit support policies and programs could be strengthened. Finally, interest rate controls and mandatory investment requirements to fund the agricultural sector should be reviewed to limit distortions. Colombia has a well-developed market for NPL management, while the insolvency framework is in a stage of transition and with areas for improvement. Strong and efficient NPL resolution and insolvency frameworks are key for financial sector stability and development. There is an active and competitive market for sales of written-off loans, mainly in unsecured segments, with an extensive availability of investors and market infrastructure. Active resolution of NPLs should continue to be encouraged by the SFC, particularly for commercial NPLs, for which NPL management by third-party providers is scarce. Several recent regulations related to the insolvency framework have been introduced, including temporary emergency decrees that make considerable modifications to the corporate insolvency system. This transitory situation creates uncertainty in the users of the insolvency system, in particular large corporations, and creditors. The incorporation of some of the provisions from these temporary decrees into the bankruptcy law would be advisable. The ultimate judge of corporate insolvency is an administrative entity (the Superintendency of Companies) which is specialized and enjoys good reputation, but the rotation of its authorities and the executive’s capacity to remove them poses severe challenges for the predictability of its criteria. Finally, the personal insolvency system requires urgent attention. 2022-04-18T16:55:27Z 2022-04-18T16:55:27Z 2022-03 Working Paper http://documents.worldbank.org/curated/en/099010004112241518/P17314204e921c0430aacb0c320cb7f9e13 http://hdl.handle.net/10986/37312 English CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Report Publications & Research Latin America & Caribbean Colombia |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
STATE-OWNED FINANCIAL INSTITUTIONS (SOFIS) STATE LENDING PUBLIC CREDIT SUPPORT POLICIES INTEREST RATE CONTROLS FINANCIAL SECTOR ASSESSMENT FINANCIAL INCLUSION GOVERNANCE OF STATE-OWNED FINANCIAL INSTITUTIONS FINANCIAL TRANSPARENCY COMMERCIAL LENDING COMMERCIAL BANKING INSOLVENCY FRAMEWORK |
| spellingShingle |
STATE-OWNED FINANCIAL INSTITUTIONS (SOFIS) STATE LENDING PUBLIC CREDIT SUPPORT POLICIES INTEREST RATE CONTROLS FINANCIAL SECTOR ASSESSMENT FINANCIAL INCLUSION GOVERNANCE OF STATE-OWNED FINANCIAL INSTITUTIONS FINANCIAL TRANSPARENCY COMMERCIAL LENDING COMMERCIAL BANKING INSOLVENCY FRAMEWORK IMF World Bank Colombia - Financial Sector Assessment |
| geographic_facet |
Latin America & Caribbean Colombia |
| description |
State-owned financial institutions
(SOFIs) and broader interventions by the state need to play
a more prominent role in supporting financial inclusion,
green activities and fostering competition among private
financial providers. While SOFIs have been generally
perceived as complementary to the private sector, their
recent incursion into direct lending and commercial
activities could raise competitive neutrality
considerations, if subsidies are involved. Improving product
design, incorporating best practices, strengthening
governance, and continuing to improve risk management would
support expansion of SOFIs activities in a non-distortionary
way. Interventions could be better coordinated to improve
efficiency, avoid duplication, and ensure alignment with
policy objectives. The formalization of Grupo Bicentenario
should contribute to these objectives. Monitoring and
evaluation (M&E) of public credit support policies and
programs could be strengthened. Finally, interest rate
controls and mandatory investment requirements to fund the
agricultural sector should be reviewed to limit distortions.
Colombia has a well-developed market for NPL management,
while the insolvency framework is in a stage of transition
and with areas for improvement. Strong and efficient NPL
resolution and insolvency frameworks are key for financial
sector stability and development. There is an active and
competitive market for sales of written-off loans, mainly in
unsecured segments, with an extensive availability of
investors and market infrastructure. Active resolution of
NPLs should continue to be encouraged by the SFC,
particularly for commercial NPLs, for which NPL management
by third-party providers is scarce. Several recent
regulations related to the insolvency framework have been
introduced, including temporary emergency decrees that make
considerable modifications to the corporate insolvency
system. This transitory situation creates uncertainty in the
users of the insolvency system, in particular large
corporations, and creditors. The incorporation of some of
the provisions from these temporary decrees into the
bankruptcy law would be advisable. The ultimate judge of
corporate insolvency is an administrative entity (the
Superintendency of Companies) which is specialized and
enjoys good reputation, but the rotation of its authorities
and the executive’s capacity to remove them poses
severe challenges for the predictability of its criteria.
Finally, the personal insolvency system requires urgent attention. |
| format |
Working Paper |
| author |
IMF World Bank |
| author_facet |
IMF World Bank |
| author_sort |
IMF |
| title |
Colombia - Financial Sector Assessment |
| title_short |
Colombia - Financial Sector Assessment |
| title_full |
Colombia - Financial Sector Assessment |
| title_fullStr |
Colombia - Financial Sector Assessment |
| title_full_unstemmed |
Colombia - Financial Sector Assessment |
| title_sort |
colombia - financial sector assessment |
| publisher |
World Bank, Washington, DC |
| publishDate |
2022 |
| url |
http://documents.worldbank.org/curated/en/099010004112241518/P17314204e921c0430aacb0c320cb7f9e13 http://hdl.handle.net/10986/37312 |
| _version_ |
1764486925433962496 |