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Expanding Bank Outreach through Retail Partnerships : Correspondent Banking in Brazil

Author

Listed:
  • Anjali Kumar
  • Ajai Nair
  • Adam Parsons
  • Eduardo Urdapilleta

Abstract

This paper explores the extent to which formal, regulated financial institutions such as banks have been able to partner with "correspondents"- commercial entities whose primary objective and business is other than the provision of financial services. The paper illustrates the case of Brazil, where banks recently have developed extensive networks of such correspondents. Such arrangements result in lower costs and shared risks for participating financial institutions, making these arrangements an attractive vehicle for outreach to the underserved. Correspondent banking requires an enabling environment to emerge, and poses some regulatory challenges and some increase in risk. While there are reasons why this model was particularly successful in Brazil, it may be replicable elsewhere if appropriate regulatory adjustments are undertaken.

Suggested Citation

  • Anjali Kumar & Ajai Nair & Adam Parsons & Eduardo Urdapilleta, 2006. "Expanding Bank Outreach through Retail Partnerships : Correspondent Banking in Brazil," World Bank Publications - Books, The World Bank Group, number 7038, December.
    • Handle: RePEc:wbk:wbpubs:7038
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    File URL: https://openknowledge.worldbank.org/bitstream/handle/10986/7038/363980Retail0p101OFFICIAL0USE0ONLY1.pdf?sequence=1
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    Citations

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    Cited by:

    1. International Association of Deposit Insurers, 2013. "Financial Inclusion and Deposit Insurance," IADI Research Papers 13-06, International Association of Deposit Insurers.
    2. Julia Fonseca & Adrien Matray, 2022. "Financial Inclusion, Economic Development, and Inequality: Evidence from Brazil," Working Papers 308, Princeton University, Department of Economics, Center for Economic Policy Studies..
    3. World Bank, 2009. "Banking the Poor : Measuring Banking Access in 54 Economies," World Bank Publications - Books, The World Bank Group, number 13804, December.
    4. Kotarba Marcin, 2016. "New factors inducing changes in the retail banking customer relationship management (CRM) and their exploration by the FinTech industry," Foundations of Management, Sciendo, vol. 8(1), pages 69-78, January.
    5. Gupta, Sanal & Singh, Puran, 2023. "What drives activity of banking agents? Evidence from Rural India," World Development Perspectives, Elsevier, vol. 31(C).
    6. Fernandes, Guilherme Barreto & Artes, Rinaldo, 2016. "Spatial dependence in credit risk and its improvement in credit scoring," European Journal of Operational Research, Elsevier, vol. 249(2), pages 517-524.
    7. Patrice T. Robitaille, 2011. "Liquidity and reserve requirements in Brazil," International Finance Discussion Papers 1021, Board of Governors of the Federal Reserve System (U.S.).
    8. Hannig, Alfred & Jansen, Stefan, 2010. "Financial Inclusion and Financial Stability: Current Policy Issues," ADBI Working Papers 259, Asian Development Bank Institute.
    9. Kendall, Jake, 2012. "Local financial development and growth," Journal of Banking & Finance, Elsevier, vol. 36(5), pages 1548-1562.

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