Colombia – Financial Sector Assessment : The Role of the State in the Provision of Financial Services
The State plays an important role in the provision of financial services in Colombia through state-owned financial institutions (SOFIs), interest rate controls, mandatory investment requirements and credit subsidies. State-owned financial instituti...
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| Format: | Working Paper |
| Language: | English |
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Washington, DC: World Bank
2022
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| Online Access: | http://documents.worldbank.org/curated/en/099835104192245861/P173142025ffb601f0be8e057c1cb8735fc http://hdl.handle.net/10986/37425 |
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okr-10986-374252022-05-14T05:10:46Z Colombia – Financial Sector Assessment : The Role of the State in the Provision of Financial Services World Bank SOFIs STATE OWNED FINANCIAL INSTITUTIONS INTEREST RATE CONTROLS INFIs FINANCIAL SECTOR POLICY The State plays an important role in the provision of financial services in Colombia through state-owned financial institutions (SOFIs), interest rate controls, mandatory investment requirements and credit subsidies. State-owned financial institutions (SOFIs) hold about 12 percent of banking sector assets and about 8 percent of insurance sector assets. SOFIs are key actors in microcredit, agricultural and small business loans markets. The recently created Grupo Bicentenario (GB), a financial holding for SOFIs reporting to the Ministry of Finance (Ministerio de Hacienda y Credito Publico, MHCP), aspires to become the third largest financial group in Colombia. There are also fourteen small subnational development financial institutions (Institutos Financieros de Fomento y Desarrollo Territorial, INFIs), albeit the size of the sector is unknown as most INFIs do not disclose financials. All credit in Colombia is subject to interest rate controls, either ceilings under usury caps set relative to industry rates or regulated rates in socially sensitive sectors. Mandatory investments remunerated at below market rates are used to provide subsidized credit to the agricultural sector. The State also provides interest rate subsidies to private intermediaries lending to certain sectors and subsides agricultural insurance premiums. In the past, agricultural producers have received debt relief, undermining credit culture. Monitoring and evaluation (M and E) and disclosure of public credit support policies and programs and their costs should be substantially strengthened to assess value for money. Information on credit support programs and their subsidies should be systemically compiled, aggregated, and reported. Profitability of SOFIs excluding subsidies should be calculated and disclosed. A strategy for systematic and rigorous impact evaluation of public credit programs and policies should be designed and implemented. The GB should also formulate a strategy for the M and E function at the group level following international best practices that would facilitate aggregate monitoring and disclosing of SOFI activities. 2022-05-13T16:31:36Z 2022-05-13T16:31:36Z 2022-02-28 Working Paper http://documents.worldbank.org/curated/en/099835104192245861/P173142025ffb601f0be8e057c1cb8735fc http://hdl.handle.net/10986/37425 English CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank Washington, DC: World Bank 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 |
SOFIs STATE OWNED FINANCIAL INSTITUTIONS INTEREST RATE CONTROLS INFIs FINANCIAL SECTOR POLICY |
| spellingShingle |
SOFIs STATE OWNED FINANCIAL INSTITUTIONS INTEREST RATE CONTROLS INFIs FINANCIAL SECTOR POLICY World Bank Colombia – Financial Sector Assessment : The Role of the State in the Provision of Financial Services |
| geographic_facet |
Latin America & Caribbean Colombia |
| description |
The State plays an important role in
the provision of financial services in Colombia through
state-owned financial institutions (SOFIs), interest rate
controls, mandatory investment requirements and credit
subsidies. State-owned financial institutions (SOFIs) hold
about 12 percent of banking sector assets and about 8
percent of insurance sector assets. SOFIs are key actors in
microcredit, agricultural and small business loans markets.
The recently created Grupo Bicentenario (GB), a financial
holding for SOFIs reporting to the Ministry of Finance
(Ministerio de Hacienda y Credito Publico, MHCP), aspires to
become the third largest financial group in Colombia. There
are also fourteen small subnational development financial
institutions (Institutos Financieros de Fomento y Desarrollo
Territorial, INFIs), albeit the size of the sector is
unknown as most INFIs do not disclose financials. All credit
in Colombia is subject to interest rate controls, either
ceilings under usury caps set relative to industry rates or
regulated rates in socially sensitive sectors. Mandatory
investments remunerated at below market rates are used to
provide subsidized credit to the agricultural sector. The
State also provides interest rate subsidies to private
intermediaries lending to certain sectors and subsides
agricultural insurance premiums. In the past, agricultural
producers have received debt relief, undermining credit
culture. Monitoring and evaluation (M and E) and disclosure
of public credit support policies and programs and their
costs should be substantially strengthened to assess value
for money. Information on credit support programs and their
subsidies should be systemically compiled, aggregated, and
reported. Profitability of SOFIs excluding subsidies should
be calculated and disclosed. A strategy for systematic and
rigorous impact evaluation of public credit programs and
policies should be designed and implemented. The GB should
also formulate a strategy for the M and E function at the
group level following international best practices that
would facilitate aggregate monitoring and disclosing of SOFI activities. |
| format |
Working Paper |
| author |
World Bank |
| author_facet |
World Bank |
| author_sort |
World Bank |
| title |
Colombia – Financial Sector Assessment : The Role of the State in the Provision of Financial Services |
| title_short |
Colombia – Financial Sector Assessment : The Role of the State in the Provision of Financial Services |
| title_full |
Colombia – Financial Sector Assessment : The Role of the State in the Provision of Financial Services |
| title_fullStr |
Colombia – Financial Sector Assessment : The Role of the State in the Provision of Financial Services |
| title_full_unstemmed |
Colombia – Financial Sector Assessment : The Role of the State in the Provision of Financial Services |
| title_sort |
colombia – financial sector assessment : the role of the state in the provision of financial services |
| publisher |
Washington, DC: World Bank |
| publishDate |
2022 |
| url |
http://documents.worldbank.org/curated/en/099835104192245861/P173142025ffb601f0be8e057c1cb8735fc http://hdl.handle.net/10986/37425 |
| _version_ |
1764487030079750144 |