Benchmarking the Efficacy of Financial Intermediation in Haiti : Current Challenges and Suggested Reforms

Haiti, once the largest eighteenth-century economy in the Caribbean under French colonial rule, is now the poorest nation in the Western hemisphere and one of the poorest in the world. A broken financial system is partially to blame. We provide an in-depth examination of the state of financial intermediation in Haiti and show that banks fail to meet demand for both banking services and credit, even when conditioned on risk, demand for banking services, and frictions associated with the cost of launching new businesses. While acknowledging that complex socioeconomic and political factors also impede economic progress, we conclude that expanded banking outreach, improved ease of doing business, and increased competition could all contribute to a more effective financial sector and lead to economic growth