This report combines a study undertaken in two phases of the Benin financial sector. Phase 1 of the study, conducted in 2003, provided a diagnostic of the financial system and focused on the state and performance of commercial banks, microfinance institutions, insurance companies and the pension fund system. Phase 2 of the study, conducted in the first half of 2004, focused on analyzing the access to finance issue identified during the diagnostic study. The lack of access to financial services by the majority of the population in Benin was the main issue revealed by the study. The study explored the view among financial institutions and banks that the lack of credit to the majority and to small and medium enterprises in particular was due to a judicial system that is slow, efficient, arbitrary, and nontransparent. Weaknesses in the legal and judicial framework governing enforceability of commercial contracts and property rights, collateral, and land and real estate registration were cited by bankers as major obstacles to the development of greater access to credit.