Credit guarantee schemes (CGSs) are a commonly used response to address the consequences of market failures in the area of lending to SMEs, as guarantees reduce the risk of lenders and favour the provision of financing to viable businesses that are constrained in their access to finance. This report discusses the activity of CGSs in Western Europe and presents an analysis based on a novel survey, conducted by the European Investment Bank Group (EIB & EIF), among 18 credit guarantee organisations in 13 countries and 33 banks operating in 17 countries.

The term ‘fintech’ has now become a part of the modern lexicon. The term is often used to describe tech startups that are presumably going to upend traditional financial institutions ( ie. banks ) through the use of new technology. Such a characterization, however, misses a large amount of what is truly transforming the financial services ecosystem.

SMEs and entrepreneurs play a key role in national economies around the world, generating employment and income, contributing to innovation and knowledge diffusion, responding to new or niched demands and social needs, and enhancing social inclusion. However, SMEs are often more affected by business environment conditions and structural policies than larger firms.

Small businesses have long mystified banks. They make up an overwhelming 99 percent of all businesses—yes, 99 percent—and employ close to half of all workers. They generate more than 60 percent of the private sector’s net new jobs. Yet despite the critical role small businesses play in the economy, most banks struggle to generate strong returns from this segment.

The rules of attraction … and subtraction

Over the last two decades, the gap between male and female employment rates has closed by only 0.6 percentage points. The financing gap for women entrepreneurs remains at an estimated $285 billion. Inequities between men and women have been exacerbated by the lingering e¯ects of the global financial crisis. Solving these and other challenges will require more than private sector support—it will require private sector leadership.

IFC, a member of the World Bank Group, and Ant Financial Services Group, one of the world’s leading tech companies and parent company of Alipay— signed a memorandum of understanding to increase support to digital financial solutions to make basic financial services more accessible in China and other emerging markets.

Building on an already strong relationship, the MoU will elevate the partnership to a new level for stronger development impact. 

Data science technology has dramatically improved access to financing and the way we manage our money. The fintech wave that began with my former company, PayPal, and the world of payments, has spread to other aspects of personal finance, from mortgages to student and auto loans to investing.

This expansion was accompanied by growing concern that the fintech boom is fraught with risks that, if left unchecked, could lead to a major bust in the financial services industry that could in turn cause harm to the broader economy.