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Access to credit in Argentina

April 2007 | Financing for Development
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Corporate author:
  • German Agency for Technical Cooperation
  • NU. CEPAL. Unidad de Estudios Especiales
UN symbol.:
36 p. : tabls.
Financing for Development
  • ECLAC Series
    • Financing for Development


The present work examines the access to credit by financially constrained
SMEs in Argentina over the last decade, focusing on the role played by
public banks, state credit policies, and non-traditional lending contracts
such as leasing, factoring, microcredit and others. We loosely define
financially constrained firms as those with good projects and insufficient
internal funding. Our conclusions are the following: (a); Since not all
SMEs are financially constrained in the previous sense but many of them
would be willing to raise at better-than-market terms, a major challenge of
any governmental policy aimed to deal with market failures (asymmetric
information and intermediation costs); is to carefully sorting out
applicants; (b); However, the actual operation seems to lack the technical
independence nor resources to implement this basic principle; (c); More
importantly, credit policies do not show the desirable degree of
transparency towards taxpayers and other interested parties, making it
difficult to pass any sound judgment about the impact of the programs in
place on production, employment, and income distribution; (d); Based on
publicly available information, public banks do not appear to perform
better than private banks in improving the access to credit; and (e); Nontraditional
instruments should not be expected to be the key for a
structural solution to this issue. We finally propose a number of practical
guidelines to strengthen the effectiveness, transparency and accountability
of governmental credit policies.

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