December 7, 2004 - Washington, DC. GDLN LAC has achieved linking Spanish and Italian institutions to write a study on the cooperative credit needs in Latin America for the small and medium enterprises, with a special emphasis on Argentina, Peru and Ecuador. Also, there will be an awareness raising effort to disseminate the results of the study. This initiative is framed within the World Bank program to assist in the productive adjustment of the economies in the region.

The study, that will begin in February 2004, will evaluate the nature of potential demand for credit by SMEs; the array of technical forms of credit that could help to reach previously rationed borrowers; and the governance features that may alleviate the gap of trust currently affecting credit growth in Latin American countries.

The study will compare the structure of financial liabilities for firms of similar size and productive sector in Italy and in other industrialized countries; the selection of the main provinces outside the capital city (Buenos Aires for Argentina) where significant productive concentrations may justify credit growth to the productive sector; and the identification of relevant case studies where growth potential appears to be more clearly constrained by inadequate external sources of credit.

The study will also evaluate the different financial instruments companies have access to and will identify possible comparative advantages among them. For this, the study will consider previous experiences such as the technical assistance to cooperative credit in Ecuador, provided by ICCREA. The study will provide a strategy to improve the credit access to small and profitable business and will define the necessary policies to achieve this goal.

The second part of the initiative, starting in summer 2005, consists in the awareness raising of the results of the study among economic agents of Argentina, Peru and Ecuador. GLDN LAC will facilitate a series of dialogues to present the study results and encourage knowledge sharing between the different institutions and agents.

For more information about this initiative, please contact Lodovico Tassoni (Ltassoni@worldbank.org)