Second, the interest in access also comes from the fact that arguments about the channels through which financial development may lead to growth often include accessrelated stories. Most prominent in this regard is the Schumpeterian argument, compellingly restated by Rajan and Zingales (2003a), that financial development causes growth because it fuels the process of “creative destruction,” and it does so by moving resources to efficient uses and, in particular, to the hands of efficient newcomers. What is relevant in this perspective is the access dimension of financial development—it is through broader access to finance that talented newcomers are empowered and freed from the disadvantages that would otherwise arise from their lack of inherited wealth and absence of connections to the network of well-off incumbents. In other words, financial development can stimulate the process of creative destruction—and thus the growth process—by expanding economic opportunities and by leveling the playing field, that is, by giving the outsiders and the poor a chance. It is on the strength of this type of reasoning that Rajan and Zingales (2003a) confidently say that “healthy and competitive financial markets are an extraordinarily effective tool in spreading opportunity and fighting poverty.” A third reason for the increasing interest on the study of access is the sheer lack of access to financial services in emerging economies, particularly when compared to the extent of access in developed countries. Recent World Bank country-specific reports suggest that more than 70 percent of the Latin American population lacks access to such basic financial services as a checking or savings account.<sup>6</sup> In industrial countries this statistic is typically below 20 percent.<sup>7</sup> By implication, the Latin Americans that have access to the more sophisticated financial services—long-term credit, mutual funds, insurance products, etc.—are truly few and far between.<sup>8</sup> The differences in access across countries are also illustrated by studies showing that firms in developing countries, especially SMEs (small and medium enterprises), use formal sources of finance much less than similar firms in industrial countries (see, for example, Beck, Demirguc-Kunt, and Maksimovic, 2002).

In light of the increasing awareness of the importance of access, not only among policymakers but also academics, this study aims at filling in one of the many gaps in this still emerging literature, by addressing specific issues related to access to finance. In particular, this study has two objectives. The first one is to discuss some conceptual issues in access to finance. The second one is to describe some recent experiences to broaden access to credit. These experiences seem to be driven by an emerging new view on the role of the public sector in financial development, which tends to favor restricted

> an increase in income levels that favors lower income sectors. Beck, Demirguc-Kunt, and Levine (2004), for example, find that in countries with higher financial sector depth the income of the poorest 20 percent of the population grows faster than average GDP per capita and income inequality falls at a higher rate. 6 See relevant references in footnote 3.

> 7 Household surveys that compile data on access to financial services across countries are surveyed in Peachey and Roe (2004) and Claessens (2005). The percentage of households without a checking account is estimated to be about 30 percent in Italy, 12 percent in the U.K., nine percent in the U.S., eight percent in Spain, and less than two percent in Scandinavian countries (Peachey and Roe, 2004).

> 8 One exception among credit services, however, appears to be consumer credit (including the micro variety), the access to which is broadening at a fast pace.

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