English (pdf)
Article in xml format
Article references
Automatic translation
Send this article by e-mail
Cited by SciELO 
Cited by Google 
Similars in
SciELO 
Similars in Google 
Permalink
1. Introduction
Although it is generally recognized that bank financing management with value chain approach allows analyzing the financial needs of the different chain actors, and glimpsing the opportunities to give them response, there are several approaches on this topic as well.
In this research work, the authors have considered that the elements the analyzed studies have provided are ways to strengthen the value chain. However, the bank financing management is conceived as one of the instruments of support, which add organizing and operating ways to contribute to the productive connection of cluster or networks around the value chain. It means to make easier the attainment of competitive advantages that emerge from the formed and developed interrelations between companies; and to boost conditions, mainly financial ones to take place; as well as to implement mutual benefit group actions.
The authors adopt the same criterion of the Economic Committee for Latin America and the Caribbean (CEPAL), which affirms that bank financing management with value chain approach, will propitiate the increase of managerial capacities to improve the links with the economic system and the productive connection or linking of companies (CEPAL, 2018); that is, it will allow making easier the relationship between the chain members, when strengthening the already existing relations with the market.
Of course, such conceptions come from devising the chain as an intervention unit, using the so called value chain approach. To adopt this approach, from several academic studies which provide practical evidence and theoretical explanations on concepts of productive and value chain in the bank financing management, becomes useful for this research due to the advantages it offers.
In the Cuban context, even when commercial banks are open to provide services to different economic actors, bank financing management current methodologies exclude a significant part of the economic agents present in the system. It does not take place because of the current regulations, but due to the management process which does not include in its analysis, the wide spectrum of participants, being focused only on the client who requests services; rejecting the other actors that in some way are involved in the productive chain and whose behavior is essential for the final product achievement, mainly for those products to be exported.
In turn, the actors should connect to new chains in more favorable conditions, and for their insertion in the market they need financial services that contribute to simultaneously achieve various objectives related to appropriate investments; to manage transactions according to the financial flow; to produce goods and services; and consequently, to contribute to the productive connection around the value chain.
However, authors like Borrás Atiénzar and Bermúdez Rivacoba (2020) have stated that there are specific limitations of the bank system, that at the same time, hinder the bank financing management with value chain approach, which include:
Bank limited autonomy. Not always the management of bank institutions results from their own strategy, but from guidelines of the Cuban Central bank, and from other governing organizations.
Institutional segmentation and specialization of the market, characterized by administrative allocation of market sectors and segments to the banks.
Low orientation to the market and insufficient study of customers’ financial needs which make up the value chain.
Limited differentiation of goods and services in correspondence with the peculiarities and needs of different market segments.
Few diversifications of bank goods and services: Low use of trust, financial leasing, factoring, confirming, letter discount, and financial-economic consultancy to customers, among others.
Poor influence of bank credits in support and accompaniment to State Enterprises, resulting from several factors such as: company financial situation, conservatism of bank institutions, and culture of aversion to risk, among others.
On the other hand, bank financing management current processes and methodologies are not able to include all the value chain actors, being territorial or not; so, changes should be carried out; to introduce innovations in the same way financial services are drew up and analyzed, and to create conditions available to those involved.
However, previous researches are recognized as important antecedents, which state the necessary innovations to, from the Bank, strengthen business connections. Among Cuban authors, Borrás Atiénzar and Bermúdez Rivacoba (2020), Borrás Atiénzar and Escobedo Almendral (2020) and Couzo Villarreal, Hung Pentón, and Borrás Atiénzar (2020) can be quoted.
Then, bank financing management with value chain must be achieved to guarantee that all actors perform their functions in the creation process of the product and its associated value, making secure the financial resources that will contribute to guarantee material resources, capacities, supplies, and information needed, in the appropriate time, way and quantity.
So, the objective of this work consists of the theoretical-methodological foundation on bank financing with a value chain approach in Cuba. The methodology used in this work includes analysis and synthesis, as well as the use of deduction for the theoretical-methodological treatment of bank financing management in the Cuban context. To provide the methodological elements focused on bank financing management with a value chain approach in Cuba, besides the critical analysis of previous methodologies, empirical methods such as information search and processing, expert´s judgment and group workshops were used.
2. Theoretical framework
2.1. Bank financing management with a value chain approach
The peculiarities of bank financing management for value chains in the international context are tackled by Johnston and Meyer (2008), Miller and Kopicki (2008), Jimenez Galarza and Jones (2009), KIT, IIRR, FOROLACFR (2010) 1, Sucre Reyes (2014); Diaz and Carranza (2016), among others, who base their work on productive and value chain concepts.
There are several concepts on productive and value chains, among them, the one by Porter (1985, 1990), the ones by United Nations Organization for the Industrial Development [ONUDI] (2004), Van der Heyden, Camacho, Marlín, and Salazar (2004), Isaza Castro (2008), Ferraro and Gatto (2010), Cifuentes Álvarez, Pérez, and Gil Casares (2011), Chávez Martínez (2012), Rodríguez Fernández (2014), Vinci et al. (2014), Hopkins y Wallerstein (as quoted in Pérez, 2016).
Once the different concepts were analyzed, the most significant point is that authors conclude that the value chain refers to production organization under the sequence of aggregate value specific activities since goods or services are devised up to their use.
The authors of this research think that the productive chain allows a systemic understanding of the relationships between the actors who are involved in the product process. In the context of a globalized and highly competitive economy, this understanding is significant; so, the different actors interested in successfully place the product on the market can detect the critical problems or factors that block a particular link of the chain.
These characteristics and qualities that allow the product to satisfy the consumers’ needs, or specific wishes, are the reasons that motivate a client to acquire such product available in the market. To add value not only refers to create processed products but to provide the products with those attributes or services specifically addressed to satisfy the requirements of the different market segments demands.
Other thought aspect focuses on the productive chain as a value chain as well, because it constitutes a way of connection where its actors plan, prepare, organize, coordinate and collaborate in order to place the product on the market having the characteristics required by the final costumers, with high attributes and aggregate values among the own members of the chain (Vinci et al., 2014).
This analysis allows the authors to consider that unlike the productive chain concept, where the different actors compete among them to optimize their economic benefits, the main objective of the value chain is the systemic optimization aimed at achieving unattainable goals individually, through cooperation, communication, and coordination among the chain actors.
Another new element to show is that when the chain in conceived as a unit of intervention in programs addressed to association, cooperation, or for financing purposes as part of policies of business support, of value chain strengthening and of productive articulation, as in this research, it is referred to as value chain.
This approach is useful for the analysis of diverse dimensions of performance or of the components of the value chain, such as: efficiency, product quality, sustainability, equality. In the same way, it is appropriate in the current context of a globalized, competitive worldwide economy (Piñones Vázquez, Acosta Ávila, and Tartanac, 2006), it offers several advantages, according to Lundy, Gottret, Cifuentes, Ostertag, and Best (2004) Quintero and Sánchez (2006).
Table 1 shows the theoretical synthesis of what the value chain approach represents in this research context.
Table 1 Value chain approaches
| Authors | Concepts | Approaches | ||
|---|---|---|---|---|
| Porter (1985) | It is the set of activities carried out by a business or company to create and aggregate in the goods and services that it sells. They are a group of generic adjustable factors and/or eventually critic factors of success to develop and maintain a competitive advantage. | To develop suppliers and to guarantee the product trace | Enterprise | |
| Quintero & Sánchez (2006) | It identifies the main activities that create a value for the clients and the related activities of support. It gives a view of the company, based on those activities and processes involved in its vital development, from the acquisition of the raw material up to the final product sale, and post-sale service. | |||
| Isaza Castro (2008) | It is the connection of the different business units facing the process of value generation and the role of each company involved in the process and it provides important elements in the design of managerial support policies which favor wealth generation through the consolidation of competitive advantages. | |||
| Porter (1990) | It is a set of activities that are carried out when competing in a sector and that can be grouped in two categories: those related to production, marketing, delivery and post sale service; and those that provide human and technological resources, supplies and infrastructure. | To improve the sector competitiveness | Sectorial | |
| Cifuentes Álvarez et al. (2011) | Fair relationships should be generated and benefits should be shared fairly among the actors. So, they all should have access to information and resources; they should be empowered to make decisions and to negotiate: and to receive benefits according to inversion, work and risks. | To strengthen the chain of value | ||
| Oddone & Padilla Pérez (2017) | It is a useful tool to move forward a new equation between the State, the market and the society around specific products and territories. | |||
| Dini (2010) | It is a collaboration agreement among economic actors, addressed to the generation of a competitive benefit which is, at the same time, each kind of positive and voluntary interaction, (neither imposed nor by chance) among actors of a specific productive community,…where independent economic actors establish collaboration agreements to develop actions towards results that could not be achieved in an isolated way.. | To encourage productive articulation | ||
| Dini, Ferraro, & Gasaly (2007) | They are aimed at stimulating cluster and productive agglomerations or the horizontal or sectorial-type networks around the chain of value; the latest ones can have a strong territorial anchorage or have sectorial or technological axes. | |||
| Vinci et al. (2014) | It constitutes a way of interaction where its actors plan, prepare organize coordinate and collaborate in order to place the product in the market, with the characteristics required by final customers; having higher attributes and aggregate values among the own members of the chain. | |||
| CEPAL (2018) | To reach a greater productive interaction starting from the integration of the different links between countries (process also known as linkage) | |||
Source: Authors’ own elaboration.
2.2. Methodological analysis on the administration of bank financing with a value chain approach
Despite their important contributions, the methodologies or guides for managing bank financing for value chains constitute models that must be adapted according to local conditions, the existing environment, the risk profile of each financial institution and the peculiarities of the Cuban economy, in this case.
For the purposes of this research, some of these methodological approaches have been studied, which constitute important antecedents provided by: Jiménez Galarza and Jones (2009), in his Basic Model for the implementation of value chain financing in Peru; the contribution of Vinci et al. (2014) in his material Towards a management with a chain approach, basic concepts and instructions for the diagnosis in Cuba and the methodological approach to focus on productive chains for small and medium-sized enterprises (MIPYMES) in the experience of Costa Rica (Sandí and Vargas, 2017). The authors Jiménez Galarza and Jones (2009) in their Basic Model for the implementation of value chain financing in Peru, include tools to carry out the initial evaluation of the financing potential of a value chain and the specific procedures to carry out it out.
Later, they affirm that to be successful, the methodology that both propose requires a solid financial institution with an appropriate institutional infrastructure, a clear commitment to rural financing, an environment that allows providing support and a viable market for the activities of the value chain that is suitable for this type of financial products.
From other perspective, Cuban authors such as Vinci et al. (2014) in his material Towards a management with a chain approach, basic concepts and instructions for the diagnosis in Cuba, offers a methodological guide on how to carry out the diagnosis of the chain, since this step is considered substantial to be able to apply the approach in the creation of new planning and management practices at the territorial and national level. The application of the chain approach to public and business management requires the following basic conditions:
To have the ability to recognize and analyze a productive sector as a complex and interdependent system of processes (production, transportation, transformation, etc.), actors (enterprises, cooperatives, etc.) and contractual, administrative relationships, etc.
To promote actions and comprehensive policies aimed at improving the functioning of this system (the chain), rather than specific policies for the actors and processes that comprise it.
As far as they are concerned, Sandí and Vargas (2017) state in their methodological approach to focus production chains that the value chain approach includes:
An analysis of the production and marketing environment for products that goes beyond simply evaluating the company.
To establish a broad level of knowledge about the methodology of the productive and value chains and of the specific knowledge of their productive, technological and commercial dynamics.
To complement adequately the credit instruments and, in general, the resources of financial institutions with existing improvement opportunities throughout the production and value chain.
Although the methodology created by these authors is focused on the risk analysis of the institutions that provide financing for cases of micro, small and medium-sized enterprises (MIPYMES), it is convenient to recognize the three key elements that are proposed for the study of the chains:
First, it is necessary to consider the space that is intended to be occupied or improved by the actor requesting financing within the chain, by establishing links with actors below and above their position.
Second, it is necessary to know if the market where this activity is being established is in commercial dynamism or decline, which generates different incentives for the respective business interaction.
Third, it is required to know if the chain has a push from demand or it is a classic supply chain.
For the proposal of this research, it is also necessary to consider the suggestions made by Sandí and Vargas (2017) on the generic expression for the value chains, the specific components and the relationships of each chain, which may vary with the level of integration and the target market.
Finally, the CEPAL methodology (2018) Productive Articulation and Regional Value Chains, a methodological proposal for SICA, focuses its object of study on cross-border value chains, known as regional value chains; and attempts to provide a theoretical and empirical approach on how to promote its adequate development in order to take advantage of the benefits of the economic integration process in the productive, commercial and sustainable development dimension.
Such effect implies the transition towards a new governance paradigm of regional value chains, as a result of a horizontal (multi-actor) and vertical (multi-level) linkage that allows taking advantage of the coordination spaces already existing within the setting of the current institutional framework in the region; and also promoting the development of new spaces for public policy and inter-institutional coordination that have an impact at the local, national and regional levels. This methodology is assumed and adapted for value chains with territorial anchor whose final product is destined to the international market.
3. Discussion
3.1. Assessment on the management of bank financing with a value chain approach in the Cuban context
In Cuba, the management of bank financing with a value chain approach does not have a proper theoretical treatment as such, although the positions of Couzo Villarreal et al. (2020) are recognized, with respect to the limitations inherent to the Cuban banking system and the recognition that the strengthening of the banking system is an imperative for updating the economic and social model in the country; in addition, it is necessary to strengthen the orientation approach towards the financial needs of economic and social actors.
Although the authors of this work defend the idea of adequately distinguishing what the needs of each link in the chain are, with respect to their strengthening through analysis with a systemic and integrative approach and the improvement of the characteristics that make them the object of financing, these should be capable of facing successfully the shocks of the market. So, business competencies in the field of marketing and other internal and external areas, of the development of companies in general could be increased. To attain this, it is necessary to change certain traditional patterns in the attention to bank financing and to transform it towards a more comprehensive scope.
In order to achieve productive or service integration to function well, generally, all actors need access to financial resources; however, their needs in this regard are different. The value chain approach makes it possible to analyze these shortcomings in the different actors to glimpse the opportunities that exist to respond to them.
Today, entities independently request bank financing, complying with the minimum requirements established by commercial banks in the analysis carried out by credit committees; Even so, there is a group of economic agents that interact with each other, therefore, if each of its members does not go to the Bank, they are not financially served.
In the opinion of Couzo Villarreal et al. (2020) and with the full agreement of the authors, if the links before and after the client who request bank financing do not work effectively, the debt that is assumed may have difficulties in recovering under the expected conditions. Therefore, if the productive and financial health of all the members of the chain is positive, within the productive articulation, it will positively influence the materialization of production and, hence, in the achievement of the income needed for the recovery of the financing. Therefore, it should be in the interest of banks to play an active role in managing bank financing over the entire process in question.
It is then about incorporating a system that integrates all those involved, and allows them to position themselves in the market, with the guarantee of adequate and timely financial resources, an aspect that today is not conceived by specialists, analysts, managers, directors and those who participate in credit committees at different levels. The idea is to incorporate different services, or it could be the case of the same services, to the various economic actors who are involved in the production process.
The change of the individual client approach to the complete value chain is also based on the position assumed by the authors that the mission of a bank institution, at least in the Cuban economy, cannot be limited only to the recovery of the financing granted in time, and form, but also to ensure that they have a positive influence on the economic efficiency of the client and other links in the chain, as well as the benefit expected by the final consumer and the country (Couzo Villarreal et al., 2020).
Take into account that the same authors Couzo Villarreal et al. (2020) affirm: ″the social function of banks is based on supporting the sustainable development of the territory and the country from a systemic and strategic perspective that integrates its three dimensions: economic, social and environmental ones″ (p. 128).
Following the same idea, Jimenez Galarza and Jones (2009) have stated that value chains require the financial institution to focus on the market potential, rather than the financing potential of an economic agent. By shifting the focus from an individual customer to that of the entire value chain, the financial institution will be able to more accurately measure risk, and thus to mitigate it. This is also one of the purposes of the work. Once the financial institution is able to establish the existing logic in the market with respect to an investment, it is in the ability to leverage the existing relationships and information between the actors in the value chain to efficiently assess risk and the possibility of receiving financing.
Simultaneously, the management of bank financing, as proposed in this research, would contribute to the articulation of the chain since its actor’s plan, organize, coordinate and collaborate so that the product reaches the market with the characteristics required by final consumers (Jiménez Galarza and Jones, 2009).
The effect of the adequate and timely application of bank financing management with a value chain approach allows the strengthening of the productive articulations that are generated, which is expressed in:
To unleash the potential of the members jointly.
To promote an increment in business capacities to increase links with the economic system and the chain itself.
To increase business skills in the field of marketing and other areas, internal and external, of the development of companies in general.
To strengthen relationships between chain members and leverage existing relationships with the market.
To contribute to the articulation of the chain and its actors with a view to competitive insertion in the market.
To manage risk more efficiently as its participants are held accountable.
Among other benefits, from the perspective of financial institutions, it could be achieved:
To increase consumers and expand the placement portfolio.
To adjust or adapt financial services.
To contribute to the real integration between economic subjects, thus achieving a social impact.
To reduce the risk of financing repayment.
Then, the present research is projected towards a paradigm shift in the management of bank financing, in favor of criteria that include or consider the creation of value for the company or other economic entities that intervene (base business units, cooperatives of agricultural production, credit and service cooperatives, other forms of non-state management and individual agricultural producers), focused on increasing the efficiency and value of the organization; therefore, each of the decisions and strategies developed by the entities must be aimed at achieving this basic pillar. Taking into account the existing priority of the country to promote exports, and since it is the first approach to this proposal, the authors focus this research, for now, on the chains that are produced for the sale of products and services to the international market.
3.2. Proposal of methodological elements for the management of bank financing with a value chain approach in Cuba
To obtain the aforementioned results, financing management with a comprehensive approach that contributes to the decision-making process is needed; constantly analyzing the process and taking into account that each part of the chain has a life of its own, and contributes to the achievement of the final product. Based on the analysis carried out on the bank financing management methodologies, a first stage is included. It consists of preparing and carrying out preliminary evaluations of the process, aimed at ensuring institutional support, organization and capacities to start the application of the approach. To this end, a work team is created made up of specialists from the banking institution who guide the process technically and methodologically, having a high level of knowledge of commercial banking and specifically with regards to bank financing.
Representatives of the government and other institutions that carry out coordination functions of companies and entities that make up the export value chain are included. The interdisciplinary and representative team of the chain establishes its own system of organization and work planning, for which the suggestions of Vinci et al. (2014) are adopted.
Decision-makers are summoned and informed so that they understand the complexity and usefulness of the analysis that is intended to be carried out, and guarantee political-institutional support for the process.
It is important to sensitize decision-makers and actors of banking institutions about the relevance of the approach, as well as to prepare theoretically and methodologically those who will be responsible for technically leading its implementation; and thus guaranteeing the organization and conditions required to initiate the process by the financial institution.
In a second stage, the diagnosis of de value chain is carried out (ONUDI, 2004; Jiménez Galarza and Jones, 2009 Padilla, 2014; Vinci et al., 2014; Padilla Pérez and Oddone, 2016; CEPAL, 2018), it aims to identify and to evaluate possible chains of value and their potentialities. It is developed by the financial institution with the participation of work teams, through some preliminary evaluations in order to understand its ability to get involved in financing with a value chain approach, to:
Identify legal or environmental difficulties that could affect their ability to offer financial services.
Complete preliminary market assessments for the different products and value chains which are being considered to receive financing.
The correct joint analysis of the members of the chain allows knowing where to locate the services, which are the most critical and priority problems in this area, and how to solve them.
The challenge is to face the classic financing model, where requests are analyzed individually and, therefore, the final service, which is financing, is granted independently.
What is sought, is to move towards a financing management that benefits each link in the chain, and consequently, improves the chain in general. That is why financing requests are analyzed taking into account the whole, and for the common benefit of all possible participants throughout the chain, even when it is made individually.
So, it is necessary to know:
The conformation of the value chain, the different activities and processes that compose it, the actors that participate and their forms of organization.
From the financing perspective, it seeks to understand the financial procedure of the chain, thus understanding the contracts or instruments used, as well as the informal relationships that occur within the production process:
Financial flows within the chain.
The financing modalities.
Levels of formality.
Bottlenecks.
The financing needs of the different links.
Here, some of the elements stated by Padilla Pérez and Oddone (2016) on the contents and levels of analysis of the diagnosis of a chain are considered; the list of questions that respond to its different segments is elaborated to be applied to the central actors of each link, and to the network of support organizations. According to the aforementioned authors, they constitute a methodological guide, which must be adapted for each chain, in correspondence with its context and characteristics, as well as its relationship with the goals - objectives of the exercise (p. 54).
It is essential to carry out a general diagnosis of the financing request and to analyze not only the client, but also all the possible economic actors that directly or indirectly intervene in the production process in order to identify and prioritize the main existing problems; as well as to assess the actors, the relationships and flows between them, the processes, the efficiency, and the economic equity of the chain.
Finally, there is planning, organization and control of financing in order to contribute to the productive articulation. The planning process includes the negotiation between the different parties identified in the previous process, creating the possible scenarios, identifying gaps, proposing the different services that the Bank provides in financing management according to detected needs, and agreeing on priorities. These elements are essential in the methodological proposal.
When the client presents at the Bank to request financing, the commercial specialist should be sufficiently prepared to interact with him or with the clients who participate in the negotiation, to deal with the financing request.
As stated above, this analysis addresses, at a first stage, exporting value chains, so that in this interaction, the most information is sought on what is going to be financed: a) if it is for export, b) if the service is produced or provided for the first time or if there is previous experience, c) if the path to export has been defined, according to the norm in Cuba, d) if the market where it is going to be exported and the prices of the market are known e) if an assessment of the costs of the product has been made in the country, and the packaging and presentation requirements are met, f) if it complies with the sanitary and rigorous measures for export. All this, is intended to have an initial assessment to be presented in the financing approval process.
Once the information on the possible viability of the export has been obtained, the links involved in the process are examined in depth. The acting specialist must consider that suppliers and potential customers can be provided, but with letters of intent or other element that indicates that it is possible. Detailed information on providers is needed: their nomination, location (province, municipality). As far as possible, to know with which Bank all the economic agents involved in the chain operate, both suppliers and customers.
This type of financing for exports must have a distinction in operation, reasonable interest rate, but not excessive within the allowed range, concessions with commissions and rates, as well as a level of attention with respect to speed and high communication with the bank offices, where the members of the chain are located.
The specialist defines the financing procedure for the client who attends and, on the other hand, he prepares all communication with suppliers and clients, after consulting with their manager or director, to facilitate the procedure.
The specialist communicates electronically or by other means with the branches of each of the members of the chain (which may be from other commercial bank), and he explains the interest of contacting the interested party and determining if they need any financial support for production or export.
In a short time, he should have a response from that initial contact. With this respect, he informs the initial sender and this one makes a summary to take it to the analysis of the committee and then, the process is followed. Every intention of financing in another municipality, province and Bank, reduces the risk of the started operation. The specialist and the credit committee follow up until the attention of all the members of the chain, whether they have been financed or not.
The conception accepted in this research is that the Bank, as a state entity, assumes an active position in financing management; detects the gaps that threaten the proper functioning of the productive chain; and achieves comprehensive attention to the chain, through the extensive network of bank branches, by using the products and services they have.
The management of bank financing with a value chain approach is a new way of acting to achieve other result, in the process of planning, organizing and controlling this financing. The intention is not to modify the instruments, but rather to transform the way in which financing requests are analyzed, taking into account the group and the common benefit of the participants and the country’s economy.
4. Conclusions
The concept of value chain allows a systemic understanding of the relationships between the actors involved in the process that a product follows. The most important thing is, for the purposes of this research, to conceive it as an intervention unit for financing purposes as part of the policies of business support, to strengthen the value chain and of productive articulation.
The management of bank financing would contribute to the articulation of the actors around the value chain and to their collaboration so that the product reaches the market with the characteristics required by the final consumers. It presupposes adjustments in the actions, in the planning, organization and control processes. It also presupposes adaptations in financial products and services in financial institutions directly responsible for financing, as well as inter-institutional articulations in the territory.
The methodological elements proposed for the management of bank financing with a value chain approach show a new perspective that could provide quality and reliable financial services for enterprises and other economic actors; and are based on the ability of the financial institution to learn and innovate, continually.
