The paper analyzes the impact of publicly owned development banks on Colombia’s credit access, emphasizing on Bancoldex’s case study. This being said, the authors claim that government-owned development banks have often responded to financial market imperfections that hinder economic development. However, there is yet not enough evidence on the effectiveness of these banks in mitigating financial constraints. In order to assess these claims, the researchers introduce a unique dataset featuring key characteristics of all loans issued to businesses in Colombia by public development banks.
The paper is organized as follows. After a brief introduction, the second section provides a description of the datasets, whilst section three offers a characterization of the dynamics of credit in Colombia. This is followed by chapter four which discusses the researcher’s empirical approach, whereas chapter five delivers the empirical results. Finally, section six offers some conclusions based on the analysis.
To conclude, the authors claim that the findings show evidence of how beneficiary firms which access credit by means of publicly owned development banks, are able to significantly expand the number of intermediaries with whom they have credit relationships. Furthermore, the document highlights how banks such as Bancoldex offer lower interest rates, larger loans, and loans with longer terms characterize, thus promoting the development of credit relationships in Colombia.