Rural financial markets in low-income countries: Recent controversies and lessons (original) (raw)
Related papers
Annotated Bibliography on Agricultural Credit and Rural Savings: IV
1980
Paper 'reviews the role of Rural Financial Markets (RFM) in the development of low income countries. Author notes that far too many important RFM policy decisions are made with little or no assistance from researchers. Author notes that small amounts of carefully done research can have a major impact on very important policy decisions and stresses the need to have policy-oriented research on RFM issues.
Innovations in financial markets: implications for rural development
Economics and …, 1997
A paradoxical situation has emerged in rural financial markets in low income countries in recent years. Most programs implemented to extend the frontier of formal finance into rural areas have failed at the same time that informal finance has thrived. This paper explains this paradox in terms of asymmetric information and transaction costs. A number of new innovations have been developed in microfinance which involves lenders, frequently NGOs, making small short-term loans to poor urban borrowers. The nature of these innovations is outlined. Although the microfinance results suggest possibilities for resolving the problems afflicting rural and agricultural finance, there are concerns about how far these new innovations can be extended beyond urban areas. Several of these concerns are discussed.
Rural Credit Rationing and National Development Banks in Developing Countries
2003
A common problem in agricultural credit markets in developing countries is the coexistence of a competitive market equilibrium interest rate and credit rationing. The literature typically explains the existence of credit rationing in competitive credit markets using adverse selection and moral hazard. Unfortunately these analyses are not consistent with the empirical reality that developing countries deal with in terms of subsidized credit, especially in the agricultural sector. This paper presents an alternative explanation for credit rationing in the agricultural sector in developing countries based on the fact that the requested loans are usually for small amounts, with many farmers making applications. As a result, the costs of operation increase with the number of loans given, so that inefficiencies in credit allocation occur when national development banks are present. It is shown that credit rationing can be reduced if shutting-down the national development bank is a feasible...
SUSTAINABILITY OF RURAL FINANCE: PROBLEMS AND PROSPECTS
Kirechev, D. Sustainability of Rural Finance. Trakia Journal of Sciences / The Sci. Ser. Publ. by Trakia Univ. - Stara Zagora, 9, Suppl. 2, Ser. Social Sciences, p. 250 - 254., 2011
The inability of farmers households and enterprises to access capital on competitive terms to undertake profitable investments, or take advantage of market opportunities, means that incomes and growth are lower than they need be. Without market instruments to insure against risk, farmers households and enterprises may even retreat from profitable projects for which they have adequate liquidity. Main objective of this study is to identify unique features of the agricultural sector and the rural economy that present challenges formal of rural finance; to look at how these affect the provision of sustainable rural financial services and, thus, determine the key elements of a strategy for successful and sustainable rural and agricultural finance. Other goals are defined as: to overcome the existing structural obstacles of financial markets for efficiency of agricultural lending and utilization of improved financial technologies; to suggest a strategies and recommendation to government policy for efficient and sustainable rural and agriculture financial sector.
Access to Rural Credit Markets in Developing Countries, the Case of Vietnam: A Literature Review
Sustainability
Agricultural sectors play an important role in the process of economic development of a country, especially in developing ones. Vietnam is known as an emerging market, which depends directly on agriculture-related activities for their livelihood, in which the issue of rural credit access still remains a confounding problem. The paper focuses on the characteristics of rural credit markets, the determinants of farmer access to the markets, the socio-economic impacts of credit access in Vietnam and briefly comparing with those of some developing countries. This question is addressed by reviewing existing literature and empirical evidence, followed by a comprehensive case study in Vietnam. Comprehensive literature review with secondary data collection and key informant interviews are methods that are applied in this research. The results of this analysis indicate the features of Vietnam markets as participated constraints, government intervention, and segmentation. Other results reveal ...
2004
The shift to a market-oriented credit and financial policy was expected to spur rural financing by the private sector that would help usher growth in the agriculture and rural areas. However, the rural areas have continued to suffer from the lack of access to financial services of banks. Despite government efforts to increase the flow of credit towards the rural sector, formal financial institutions have largely ignored the sector. Lack of financial depth and very limited access to financial services continue to hound the rural sector. Mapping out efficient rural finance policies and implementing them remain as critical challenges for policy makers. Although it is impossible to consider in this brief review paper many other interesting papers and studies on rural finance, the literature survey and the rural finance experiences discussed in the paper can hopefully motivate a policy research agenda on rural finance in the immediate future. This paper, thus, discusses recent new research findings and information on rural finance and suggests thematic areas for policy research.