RURAL FINANCE LITERATURE REVIEW
Annotated version (with abstracts)

References listed alphabetically by author.

Compiled by Catherine Ford, World Council of Credit Unions
with assistance from Ursulla Schiller, World Council of Credit Unions

Adams, Dale W. 1995. From Agricultural Credit to Rural Finance. Quarterly Journal of International Agriculture 34, no. 2: 109-20.

Abstract: Forty years ago, credit was thought to be a critical part of a package of inputs needed to boost agricultural production. Initial results of donor and government efforts to expand agricultural credit were so encouraging that by the early 1950s some experts felt they could transplant credit programmes from developed countries that would succeed in most low-income countries. Optimism persisted for several decades until the early 1970s when problems began to surface in numerous credit programmes. The gravity of these problems became more apparent and pessimism grew until in the late 1980s major donors began to abandon agricultural credit efforts and instead increasingly focused on rural finance. This contribution discusses the evolution of agricultural credit into rural finance. It gives also an explanation for why this evolution occurred, and then summarizes the lessons that have been learned along the way. The paper concludes by outlining the major challenges for future financial infrastructure building in rural areas.
Abstract by: CABI

Adams, Dale W, H. Y. Chen, and M. B. Lamberte. 1993. Differences in uses of rural financial markets in Taiwan and the Philippines. World Development 21, no. 4: 555-63.

Abstract: Despite entering the post World War II period in similar economic situations, by the early 1990s, the rural sectors in both Taiwan and the Philippines differed greatly. The rural sector in Taiwan displayed many of the features found in developed economies, while in the Philippines, poverty was still widespread. This paper argues that the performance of Formal Rural Financial Markets (FRFMs) in the two countries explains an important part of the difference in rural development. The paper considers the success of FRFMs as being indicated by the ability to provide a sustained flow of services to an expanding number of people. The background to the development of rural finance in the two countries is discussed, taking the examples of cooperatives and government organizations as lending agencies. The superior performance of FRFMs in Taiwan is seen as a result of emphasizing the efficient allocation of resources, while in the Philippines, FRFMs were used to handle target loans and subsidies. The paper highlights 10 specific policies that help explain the superior performance of rural financial markets in Taiwan. The paper concludes that farmers in low-income economies will find it increasingly difficult to invest without strong dependable FRFMs.
Abstract by: CABI

Adams, Dale W, and Delbert A. Fitchett. 1992. Informal Finance in Low-Income Countries. Colorado: Westview Press, Inc.

Almeyda, Gloria. 1996. Money Matters: Reaching Women Microentrepreneurs with Financial Services. Washington D.C. USA: Inter-American Development Bank.

Anolin, Andrea Luisa C. 2000. Women and micro-finance programs .Civil Society and Governance Programme, IDS.
Electronic version: http://www.ids.ac.uk/ids/civsoc/final/philippines/phl7.doc

Abstract: The provision of micro-finance for women is now also regarded not only as an instrument for poverty alleviation but also for women's empowerment. Whilst Filipino women have traditionally not had access to resources, in the latter part of the 1980s, a trend emerged towards increasing women's participation in socio-economic work. This case study therefore intends to find out the impact that micro-finance programs and services have had on the lives of Filipino women, and how it affects women's participation in political life and the quality of political governance by local government units / agencies, if any.
The case study focuses on the experiences of the Women's Education, Development, Productivity and Research Organization [WEDPRO], Inc. and the Maligaya Women's Multi-Purpose Transport and Service Cooperative [MWMPTSC] in providing micro-finance services to its beneficiaries and the resulting encounters they have had with local government units in the course of implementing these programs.
Abstract by: Eldis

Asian Productivity Organization. 2001. Agricultural Credit in Asia and the Pacific Report of the APO symposium on Agricultural Credit held in Tokyo, from 8 to 14 September 1999. Tokyo: Asian Productivity Organization.

Abstract: This book is a compilation of the papers presented at the Symposium on Agricultural Credit that was organized by the Asian Productivity Organization (APO) in September 1999. Part I presents a summary of the findings of a regional survey on the subject in 1998 in 13 APO member countries. Part II presents 2 regional reports that deal with agricultural credit in APO member countries and the impact of financial deregulation on farm credit. Part III contains 2 resource papers about rural finance in Asia. 16 country reports are presented in part IV.
Abstract by: CABI

Atieno, Rosemary. 2001. Formal and informal institutions' lending policies and access to credit by small-scale enterprises in Kenya: an empirical assessment. African Economic Research Consortium (AERC) ed.The Regal Press Kenya.
Electronic version: http://www.aercafrica.org/documents/rp111.pdf

Abstract: The main objective of this study is to investigate and assess the role of the institutional lending policies of formal and informal credit institutions in determining the access to and use of credit facilities by small-scale entrepreneurs in rural Kenya. The results of the study show the limited use of credit reflects lack of supply, resulting from the rationing behaviour of both formal and informal lending institutions. The study concludes that given the established network of formal credit institutions, improving lending terms and conditions in favour of small-scale enterprises would provide an important avenue for facilitating their access to credit.
Abstract by: Eldis

Balisacan, A. M. 2001. Pathways of poverty reduction, rural development and transmission mechanisms in the Philippines. Philippines: Asian Development Bank (ADB).
Electronic version: http://www.eldis.org

Abstract: This paper reviews the experience of Philippine rural development. It specifically examines the influence of government policies and institutional arrangements on rural welfare outcomes. The paper focuses on the link between agricultural growth and rural poverty outcomes, and attempts to explain why Philippines had a disappointing pace of poverty reduction compared to its neighbors.
The paper outlines government policies affecting rural development. It also examines the determinants of poverty reduction in rural areas during the 1980s and 1990s.
Abstract by: Eldis

Barkema, Alan D, and Mark Drabenstott. 2000. Rural Credit Markets of the Future: Obstacles and Opportunities. Agricultural Outlook Forum 2002.Kansas City, USA: Center for the Study of Rural America.

Abstract: Rural America’s challenges are both numerous and widely diverse. Many rural communities struggle to maintain their fundamental physical and social infrastructure including roads, utilities, and educational and health services. Another new and critical infrastructure challenge for many rural communities is connecting to the new digital economy. In many rural areas, paying for these important services will require new engines of growth, beyond the traditional locomotives of agriculture and energy. Regardless of how America responds to these challenges, access to capital via credit market will remain vitally important. The unevenness of the rural economy presents many communities with serious challenges in the period. Five challenges appear particularly important: closing the digital divide, growing new entrepreneurs, leveraging the new agriculture, sustaining the rural environment, and boosting human capital. Community banks will almost certainly remain dominant rural business lenders in the period ahead, especially given the new tools they received in the FSMA. And while technology will clearly change the banking business, most rural community banks will remain heavily tied to their communities through a legacy of business relationship. The simple relationship still holds: as go their communities, so go community banks.
Abstract by: CSF

Bastiaensen, Johan. 2000. Institutional Entrepreneurship for Rural Development: the Nitlapan Banking Network in Nicaragua. Rural Development in Central America: Markets, Livelihoods and Local Governance. Ruerd Ruben, and Johan Bastiaensen, 151-70. New York: St. Martin's Press, Inc.>/p>

Abstract: It is noted that alternative financial organization-building has been thought of as an instrument of social innovation. It is in the light of this hypothesis that the paper undertakes an analysis of the experiences of Nitlapan (a banking network in Nicaragua) in building a more 'democratic' and entrepreneurially viable financial organization that serves small and medium sized producers. The first section develops a brief tentative interpretation of the rural institutional crisis and the need for institutional change. Subsequently, Nitlapan's financial network and its governance structure are described. The concluding sections relate this governance structure and its historical genesis to the inherited institutional environment and makes some comments on the possibilities for institutional change by means of financial organization-building.
Abstract by: CABI

Basu, Santonu. 1997. Why Institutional Credit Agencies are Reluctant to Lend to the Rural Poor: A Theoretical Analysis of the Indian Rural Credit Market. World Development 25, no. 2: 267-80.

Abstract: This paper examines why institutional credit facilities remain unable to extend credit to the rural poor. Analysis indicates that poor peasants at best can offer an entitlement set as a mortgage, comprised only of future shares of their harvest, which itself is subject to risk. Consequently, lenders cannot advance loans without risking extensive loss of loanable funds. As landlords’ income is subject to the same risk as that of peasants, they advance loans to ensure that their own income is not affected by the peasants’ financial situation. An extension of institutional credit to peasants results only in subsidization of landlords.
Abstract by: Author

Baumann, Pari. 2000. Sustainable livelihoods and political capital: arguments and evidence from decentralisation and natural resource management in India. London: Overseas Development Institute (ODI).
Electronic version: http://www.odi.org.uk/publications/wp136.pdf

Abstract: Looks at the Sustainable Livelihoods (SL) approach as an analytical framework. The potential of SL was examined by applying the framework for analysis in a research project on decentralised natural resource management in India. The SL framework was found to be a useful construct for the analysis of decentralised natural resource management. The SL framework does not incorporate theories of change or transformation based on political science, and because of this it was found to present a neutral starting point for research. Central to the SL framework is a vision of the community as an outcome of relations based on the interaction between different capital assets. The SL framework is therefore able to avoid making assumptions about what constitutes the community and what motivates collective action, which is a frequent failing in the literature on natural resource management. In the same way, the SL framework allows for an analysis of the factors that contribute towards natural capital.
Abstract by: Eldis

Binswanger, Hans, S Khandker, and M Rosenzweig. 1993. How infrastructure and financial institutions affect agricultural output and investment in India. Journal of Development Economics 41: 337-66.

Bose, Pinaki. 1998. Formal-informal sector interaction in rural credit markets. Journal of Development Economics 56: 265-80.

Abstract: The majority of small cultivators in the less developed countries are not regarded as credit-worthy by the formal sector financial institutions, and are forced to borrow from the moneylenders in the informal credit market. This paper shows that when such borrowers differ in their likelihood of default, and the moneylenders are asymmetrically informed about the client-specific degree of risk, the policy of providing cheap credit through the formal sector can generate adverse composition effects' which worsen the terms of credit and the availability of loans in the informal sector.
Abstract by: CABI

Bouman, F. J. A. 1990. Informal rural finance: An Aladdin's lamp of information. Sociologia Ruralis 30, no. 2: 155-73.

Abstract: The one-sided emphasis on the flow of credit via formal financial channels is based, on the one hand, on the strong belief in the superiority of the formal sector and, on the other hand, on a series of misunderstandings of the nature, magnitude and role of the informal finance sector and the type of actors that predominate in this field. One of the consequences of this one-sided emphasis on credit rather than financial intermediation has been that project planning, as well as evaluation of results, has remained limited to an analysis of the process of lending focused mainly at the problems and peculiarities of lending institutions. Much less, if any, attention has been paid to the behaviour and peculiarities of savers and borrowers unless in terms of formulating their credit needs. Inherent in this is the concept of the moral and technical superiority of the formal over the informal sector in dispensing financial services to the poor. However, a rethinking of this conventional view was more or less forced upon aid agencies with the arrival of the oil crisis, which brought about a new realization of the necessity of generating domestic savings within the developing countries' own economy. The paper discusses the myth that informal finance is the exclusive domain of the village money lender and argues that a close study of the financial behaviour of low-income rural households dispels such stereotypes and prejudices. An examination of the interest rates within the informal finance market argues that, in the main, cost and risk factors rather than monopoly positions and exploitation dictate the level of interest charged.
Abstract by: CABI

———. 1989. Small, Short and Unsecured: Informal Rural Finance in India. Oxford: Oxford University Press.

Bouman, F. J. A, and Otto Hospes. 1994. Financial Landscapes Reconstructed: The Fine Art of Mapping Development. Boulder, Colorado: Westview Press, Inc.

Abstract: The book examines the changing emphasis in the policy frameworks of rural financial intermediation in developing countries, including the distribution of cheap credit via specialized farm credit institutions, to the building of linkages between banks and savings groups, to attempts to use traders or NGOs as new conduits of financial lending. It comprises revised versions of 22 papers presented at the seminar "Financial landscapes reconstructed" held in Wageningen, The Netherlands, November 17-19, 1992. It is argued that the study of financial landscapes in developing countries requires a multidisciplinary approach, combining knowledge of financial technologies with agroeconomic, political-administrative and sociological insights. The book is divided into three parts: Part one provides a background for the following papers and places the recent changes in context. Part two examines the development of rural finance, in particular the importance of the informal sector. Part three provides a number of case studies which focus on financial structures in Sri Lanka, the Philippines, Thailand, India and Indonesia.
Abstract by: CABI

Bunch, Roland. 1998. People-Centered Agricultural Development: Principles of Extension for Achieving Long-Term Impact. Agriculture and the Environment: Perspectives on Sustainable Rural Development. Editor Ernst Lutz, 145-55. Washington, D.C.: IBRD/The World Bank.

Abstract: Major agricultural extension systems developed after the countries gained economic stability and may not be suitable to resource-poor farmers in developing countries. But over the past 27 years, nongovernmental agencies in Central America have developed principles to make agricultural extension effective. People-centered agricultural development systems are effective and have proven capable of achieving high rates of farmer adoption and increased productivity, at a much lower expense than other extension systems. This paper looks at the relationship between people-centered agricultural development and the factors that make the agricultural development process sustainable. After examining 250 agricultural development projects, the people centered agricultural development approach has proven effective in a range of environments. The agricultural improvement process is found to be most stable with villager empowerment and farmer-run innovations.
Abstract by: UES, CSF

Burkett, Paul. 1989. Group lending programs and rural finance in developing countries. Savings and Development 13, no. 4 : 401-19.

Abstract: The paper derives its inspiration from the renewed interest in group lending as a method of providing credit for small farmers in developing countries. The establishment of group lending is seen as a partial response to the apparent failure of previous subsidized loan projects to meet set objectives. Group lending reduces risks, lowers administrative and transaction costs; and it is argued that its design and evaluation should reflect the goal of improving the quality of rural financial services. The functions of group lending schemes are discussed in relation to financial development, informal finance and the proper goal of rural finance projects. The mechanisms by which interest rate ceilings and others have stunted the potential contribution of group lending to rural finance development are highlighted. The conditions for a successful use of joint liability as loan security, the proper role of savings mobilization and informal finance schemes are also discussed.
Abstract by: CABI

CASIN, SAA, and GLOBAL. 2002. Food Security in a Changing Africa. Geneva: Center for Applied Studies in International Negotiations.

Catholic Relief Services. 2001. Project for the development of rural financial markets and of products : final report. Nicaragua: USAID Mission to Nicaragua .
Electronic version: http://www.dec.org

CGAP, and GTZ. 1998. Savings Mobilization Strategies: Lessons From Four Experiences. Washington, DC: Consultative Group to Assist the Poorest (CGAP).
Electronic version: http://www.cgap.org/html/p_focus_notes13.html

Abstract: Around the world, poor households save in various forms and for various purposes. Although empirical evidence suggests that the poor would deposit if appropriate financial institutions and savings facilities were available, little progress has been made to establish MFIs as full-fledged financial intermediaries. In fact, today most micro-finance institutions (MFIs) offer only credit, and savings mobilization remains the forgotten half of micro-finance. The CGAP Working Group on Savings, formed in 1996 and chaired by GTZ (representing Germany), has recently completed case studies of four deposit-taking MFIs and a related comparative paper. This note represents a synopsis of these studies.
Abstract by: Eldis

Coetzee, G. 1994. Restructuring Rural Financial Institutions. Agrekon 33, no. 4: 220-224.

Abstract: South Africa is in a process of change. This is also true for the agricultural sector and thus all related services. Agricultural finance, as a segment of rural finance, is the topic of an intended commission of inquiry. The current and intended public sector agricultural financial support structure should be measured against a set of guidelines. These are elaborated on in this paper. In addition, given the framework, some views are put forward as to what direction rural finance, and specifically agricultural finance, should take, and what structure should be applicable, given the principles as outlined. The paper concludes with some remarks about institutional change in South Africa and the intended rural financial services commission of inquiry.
Abstract by: CABI

———. 1998. Retail Rural Finance in South Africa: From Policies to Practice. Agrekon 37, no. 4: 517-27.

Abstract: In South Africa a recent government study laid the foundations for improving access to financial services for rural people; but more is needed than simply stating the policies. It is argued that policies do not differentiate target groups adequately. This can result in inefficient implementation of policies. The concept of a broad range of institutional possibilities to improve access to financial services, none of which specifically provides a conclusive model, is considered to be realistic. The idea is to muster this range of possible forms into a coordinated effort to increase access to financial services for rural people in all rural areas. This paper emphasises the reality of the situation when choosing policy directions. NGOs, commercial banks and the Post Bank do not hold the primary key to improving access to financial services in rural areas in South Africa. Several studies discussed the broad range of possible institutional forms in the rural areas of South Africa.
Abstract by: CABI

Deloitte Touche Tohmatsu International and Weidemann Associates, Inc. 2002. Evaluation of the rural financial markets activity (FOMIR) for USAID/El Salvador. Washington, DC: USAID .
Electronic version: http://www.dec.org

Desai, Bhupat, and N. V. Namboodiri. 1992. Performance of Institutional Finance for Agricultural Development. Economic and Political Weekly: 190-196.

Abstract: The Papua New Guinea Development Bank was established in 1967 to provide funds for primary production, to establish and develop industrial and commercial undertakings, and to provide management services. Legislative changes redirected the Bank's emphasis towards agricultural development; but the Rural Development Bank (as it is now called) has not succeeded in adequately meeting its mandate to provide finance to agriculture. Failure of institutional rural finance has resulted in the exploration of other possibilities. The Department of Agriculture and Livestock has recently introduced the idea of commodity based credit through the existing banking system. The paper examines the problems experienced by with the Rural Development Bank, and its current status, before presenting some ideas for experimenting with new models. It notes that in such models careful evaluation would be required, of the financial policy, institutional policies, the viability of the credit operation, the resource for lending, managerial
Abstract by: CABI

Deschamps, Jean-Jacques. 1999. Rural Banking in Emerging Markets: Can it Work? Agricultural Finance and Credit Infrastructure in Transition Economies: Proceedings of OECD Expert Meeting, Moscow, Feb. 1999., 148-58. Moscow: O.E.C.D.

Abstract: Rural banking poses an inherently difficult set of challenges in emerging markets. This paper points to lessons of experience drawn from successful (and mostly private) models that have arisen as alternatives to direct government intervention in the sector over the past two decades. It also outlines areas where government support to private initiative can still be helpful.
Abstract by: Author

Diagne, Aliou, and Manfred Zeller. 2001. Access to Credit and its Impact on Welfare in Malawi. Washington, DC: IFPRI.

Abstract: This paper analyses the determinants of access to credit and its impact on farm and non-farm income and household food security in Malawi. It is shown that the contribution of rural microfinance institutions to smallholder income can be limited, or negative if the design of the institutions and their services does not take into account the constraints and demands of their clients. A cautious and gradual strategy is recommended for the expansion of rural financial institutions. It is suggested that rural financial institutions should focus primarily on high-potential agricultural areas where they not only lend for production of an array of cash and food crops, but also offer financial services for off-farm enterprises, at low transaction costs.
Abstract by: CABI

Dorward, Andrew, Colin Poulton, and Jonathan Kydd. 2001. Rural and Farmer Finance: an International Perspective. ADU Working Paper ; 02/04 ed.South African Association of Agricultural Economists.

Abstract: A wide range of institutional models and financial products are currently serving, or attempting to serve, the poor’s demands for savings and loan services. Loan products are often structured in ways that make them particularly unsuited to seasonal lending, unless households have access to alternative cash sources which are not related to agricultural seasonality. However, very few of these operate in lower density rural areas or in areas where there has not already been some agriculturally based growth in the rural economy. Virtually none are operating in the conditions faced by the majority of poor farmers in sub Saharan Africa offering financial products that adequately address farmers’ needs for seasonal finance for food crop production. This is partly due to the high costs and risks in the supply of such services, but may also reflect high risks and relatively low returns for borrowers investing in agriculture.
Abstract by: Author, CSF

Duong, Pham, and Yoichi Izumida. 2002. Rural Development Finance in Vietnam: A Microeconometric Analysis of Household Surveys. World Development 30, no. 2: 319-35.

Abstract: This study examines rural household participation in the Vietnamese rural credit market, the behaviour of a formal lender in response to the credit needs of households, and the impact of credit. Data are collected from surveys of 300 households. The rural credit market in Vietnam is quite segmented. The formal sector specializes in lending for production purposes whereas the informal sector's lending is quite diverse. We show that rural households are rational in deciding which sources to ask for a particular kind of loan. Reputation, the dependency ratio of households, and the amount of credit applied for by the household are identified as the determinants of credit rationing by the bank. Credit is shown to have a significant impact on household production. These findings are important for the government if it wants to support a rural financial system that encourages dynamic lending policies to meet farmers' demands.
Abstract by: Author, CSF

Easterly, William. 2002. An Identity Crises? Testing IMF Financial Programming. Washington, DC: Center for Global Development.
Electronic version: http://www.cgdev.org/wp/cgd_wp009.pdf

Abstract: The IMF bases its monetary and fiscal policies on a financial programming model which relies on monetary, balance of payments, and fiscal accounting identities. The financial programming assumes a one for one relationship from the identity between the policy variable and the outcome variable and assumes the other variables in the identity to be exogenous with respect to the policy variable.
This paper tests this identity-based framework by using different statistical techniques and finds that:
a) the elasticity of inflation with respect to excess money growth is significantly less than one, and shows a high variance in the data; b) velocity account changes on average for 57% of the change in the price level; c)imports are not significantly related to long-term disbursements in most countries; d) the median income elasticity of imports is 1.36; e) government deficits do not have a one for one link with domestic credit creation
The paper identifies the following shortcomings in the IMF financial programming model:
a)it does not consider the endogeneity of all the variables in each macroeconomic identity; b) its simple behavioural assumptions are unstable; c) there are large statistical discrepancies in all the identities.
Abstract by: Eldis

Economic and Social Research Foundation (ESRF). Raising production levels and alleviating poverty in Tanzania's rural areas: challenges of rural transformation. Tanzania : Change Publications, Ltd.
Electronic version: http://www.eldis.org/fulltext/esrfpolicy02.pdf

Abstract: This article suggests that the crucial impetus for promoting agricultural productivity and non-farm employment, in Tanzania, would have to come from a technological transformation of the agricultural sector and rural industrialisation. Several policies and strategies are outlined to be adopted in this context.
Abstract by: Author, edit CSF

Edelman, Mark. 1997. The Adequacy of Rural Capital Markets: Public Purpose and Policy Options. Economics Staff Paper number 292 ed. Iowa : Iowa State University.

Abstract: This testimony highlights the authors' observations regarding gaps in rural financial markets as they relate to rural development and legislative opportunities for addressing the gaps identified. The observations are based on the author's experiences and literature reviewed as a member of two national expert panels organized by the Rural Policy Research Institute to provide policy makers and staff with analysis on (1) alternative proposals for the rural development title of the 1996 farm bill and (2) the adequacy of rural financial markets in support of rural development.
Abstract by: CABI

Fan, Shenggen, Peter Hazell, and S. Throrat. 2000. Government Spending, Growth, and Poverty in Rural India. American Journal of Agricultural Economics 82: 1038-51.

Faruqee, R, R Ali, Y Choudhry, M Mahmood, M Ahmad, S Qureshi, and I Nabi. 1998. Strategic Reforms for Agricultural Growth in Pakistan. Washington, DC: IBRD.

Abstract: Papers assess the past performance of Pakistan's agricultural sector, analyse the major issues and constraints facing the sector in recent years, and propose a strategy for accelerating and sustaining growth in the coming decades. The seven papers are as follows: 'Agriculture in Pakistan - its role, performance, and constraints' (Faruqee, pp.1-22); 'Removing policy distortions and redefining the role of government' (Faruqee, pp.23-44); 'Phasing out public enterprises in agriculture' (Faruqee; R. Ali; Y. Choudhry, pp.45-68); 'Reforming the agrarian land market' (M. Mahmood, pp.69-86); 'Improving irrigation and drainage' (M. Ahmad; Faruqee, pp.87-108); 'Improving rural finance' (S. Qureshi; I. Nabi Faruqee); and 'Developing a comprehensive strategy for reform' (Faruqee, pp.143-148).
Abstract by: CABI

Feinstein, Osvaldo. 2000. Rural Finance and Poverty Alleviation in Central America: Evolution and Challenges. Rural Development in Central America: Markets, Livelihoods and Local Governance. Ruerd Ruben, and Johan Bastiaensen, 141-50. New York: St. Martin's Press, Inc.

Abstract: The paper presents a comparison between the view dominating rural finances in Central America during the 1970s and the 'new paradigm' of the 1990s, highlighting several challenges. It focuses on a trade-off that has emerged in the evaluation of several rural finance projects in Central America: the trade-off between outreach and targeting (TOBOT). The paper analyses some key factors behind the TOBOT, discussing possible ways to overcome it. The paper starts with a brief presentation on the evolution of the approach to rural finances in the context of rural poverty alleviation. The second section discusses a set of challenges associated with this evolution; and the third and final section discusses the trade-off between outreach and targeting, and the corresponding challenges.
Abstract by: CABI

Fernando, Nimal. 1994. Improving Rural Institutional Finance: Some Lessons. Papua New Guinea Journal of Agriculture, Forestry and Fisheries 37, no. 1: 92-103.

Abstract: Fernando provides a summary of the major criticisms of the conventional approach to rural credit. The need for a broader view and a holistic approach, and the importance of institution building is emphasized. Subsidies in building institutional capacity essential in rural savings mobilizations, the role of private commercial banks, and the need for directed finance programmes are outlined.
Abstract by: CABI

Fong, Monica S., and Heli Perrett. 1991. Women and Credit: The Experience of Providing Financial Services to Rural Women in Developing Countries. Milan, Italy: Finafrica Foundation.

Abstract: Rural women have been one of the most consistently neglected groups in development planning and programming, and, paradoxically, one of the groups with the greatest unrealized potential. Direct access to credit, accompanied by savings, can become a catalyst for change that brings benefits to rural women, as well as to their families and communities. In the introductory chapter, the reasons for direct l ending to rural women in developing countries are highlighted and women's creditworthiness is reviewed. A review of women's informal practices of borrowing and savings, their advantages and disadvantages is given in Chapter 2. This is followed by an overview of women's limited use of formal financial markets for borrowing and savings, and existing constraints on the supply of credit to women in Chapter 3. Chapter 4 discusses women's demand for credit, its assessment and promotion, with reference to both institutional credit and to savings. Chapter 5 provides an overview of institutional strategies for providing financial services to rural women, either separately or together with men, with extensive case illustrations; the variety of operational linkages that are being tried between credit and savings. The role, development and functioning of grassroots credit and savings groups, and the factors that determine its effectiveness in practice are discussed in Chapter 6. The concluding chapter summarizes lessons about planning of appropriate financial services for women and the related policy implications.
Abstract by: Authors

Fries, Bob. 2001. Basic Guidelines for Effective Rural Finance Projects: The Guide to Developing Agricultural Markets & Agro-Enterprises. Washington, DC: World Bank.
Electronic version: http://lnweb18.worldbank.org/essd/essd.nsf/All/
AC1E358BAD58844A852568F6006FB4CF?OpenDocument

Abstract: The findings and principles laid out in this paper form a basis for designing and implementing projects that expand access to financial services in rural areas, by fostering a rural financial market characterized by a conducive legal and regulatory environment where competing firms and institutions can deliver these services profitably.
The author reviews the constraints to rural finance and presents options for overcoming these. A broad range of financial institutions and the fundamental practices central to the sustainability of these is discussed. The criteria and specific steps for designing effective programs in this field are reviewed and suggestions are offered for monitoring and evaluation. Examples of innovative programs and best practices are mentioned.
Abstract by: Author

Gaiha, Raghav. 2002. Microcredit and the rural poor: a review of the Maharashtra rural credit project. Journal of Microfinance 3:2
Electronic version: http://spc.byu.edu/JournalofMicrofinance/mfv3n2/rural.pdf

Abstract: An attempt is made to review Maharashtra Rural Credit Project (MRCP)-a microcredit scheme-by focusing on the process of implementation and implications of targeting, empowerment of women, and trade off between the coverage of the poorest and sustainability of this scheme. Attention is drawn to the deficiencies in the design and implementation of this scheme that limit the participation of the poorest and the benefits accruing them. Moreover, it is argued that there is a risk of overstating the trade-off between the coverage of the poorest and sustainability of the MRCP if these deficiencies are over-looked.
Abstract by: Author

Goetz, A., and R. Gupta. 1996. Who takes the credit?: gender, power and control over loan use in rural credit programs in Bangladesh. World Development, 24, no. 1: 45-63.

Abstract: Explores special credit programmes in Bangladesh from a gender perspective. States that credit institutions have dramatically increased the credit available to poor rural women since the mid-1980s. However, though they are intended to contribute to women’s empowerment, few evaluations of loan use investigate whether women actually control this credit. Considers whether women’s continued high demand for loans and their manifest high propensity to repay is often taken as a proxy indicator for control and empowerment. This assumption is challenged by exploring variations in the degree to which women borrowers control their loans directly, using recent research findings which reveals that a significant proportion of women’s loans are controlled by male relatives. Concludes that a preoccupation with “credit performance” (measured primarily in terms of high repayment rate) affects the incentives of fieldworkers dispensing and recovering credit and may out-weigh concerns to ensure that women develop meaningful control over their investment activities.
Abstract by: Authors

Goodland, Andrew. 2000. Rural finance helping to promote sustainable credit. UK: Natural Resources Institute (NRI).
Electronic version: http://www.nri.org/publications/policyseries/PolicySeriesNo01.pdf

Abstract: Increasing access to financial services still has a role in combating rural poverty. In the past, the narrow focus on subsidized credit for agricultural production proved unsustainable. However, recent experiences have been more positive. By understanding the breadth of financial needs of the poor, and modifying approaches to providing savings and credit services, financial institutions have begun to realize the potential of the rural market. Further expansion into this market is possible, through collaboration between the formal and informal sectors, reducing the 'distance' between institutions and their clientele, and adapting and innovating service delivery mechanisms to local conditions.
Abstract by: Eldis

Goodland, Andrew, Gideon Onumah, Juliana Amadi, and Geoffrey Griffith. 1999. Rural Finance . The University of Greenwich: Natural Resources Institute.

Abstract: Improvements to financial services, both formal and informal, must be customized to serve the needs of the poor. Thus, in designing approaches to lower costs and increase accessibility of financial services, consideration must be given to the limitations of the poor in making savings and using credit in productive ways. Most experience with provision of rural financial services has focused on livelihood promotion designed to boost productivity and income through access to cheap credit. Yet, this has minimal impact on poverty, as current programs have proven to be unstable and are criticized for promoting unsound investments and indebtedness. Although micro-finance holds a key place in rural economies, the poor struggle with accessing it. This reflects a lack of information, high risks, lack of collateral, physical distance from providers and small individual transaction requirements. These factors in conjunction with preconceptions of the poor as being unable to save and a potential for liability, increase the cost of servicing the poor. Three sets of issues relating to rural finance and poverty alleviation are explored; the types of finance required by the poor, the delivery mechanisms currently in place, both formal and informal, and the steps required to improve availability and accessibility of financial services. Specific attention is given to women who make up 70% of classified poor.
Abstract by: UES

Gramlich, Edward M. 1994. Infrastructure Investment. Journal of Economic Literature 32: 1176-96.

Gurgand, Marc, Glenn Pederson, and Jacob Yaron. 1996. Rural Finance Institutions in Sub-Saharan Africa: Their Outreach and Sustainability. Savings and Development 20, no. 2: 133-69.

Abstract: A review is presented of the performance of six rural finance institutions (RFIs) in Sub-Saharan Africa. Two performance criteria are used to evaluate these RFIs: the level of outreach, and the degree of self-sustainability achieved. Each of the RFIs exhibits some weaknesses according to the identified performance criteria and crucial information on their performance is often missing. However, outreach of all six RFIs has been significant. Generally, the selected RFIs in Cameroon, Togo, Rwanda, Benin, Malawi and Burkina Faso have extended financial services to rural clients that are usually excluded from formal financing - smallholder farmers, woman and the poor. No single model for successful rural financial intermediation emerged from the study. Rather, these RFIs have employed a variety of operating modes to improve savings mobilization, provide credit, and increase their flexibility in service delivery. Assessment of sustainability reveals more varied performance. Loan collection rates are quite different across the institutions and there has been a build-up of arrears in Cameroon, Togo and Rwanda. While public intervention is often needed during the establishment phase of these RFIs, it should be focused on institution-building and not lead to subsidized interest rates on loans.
Abstract by: CABI

Hazell, Peter, Shenggen Fan, and T. Haque. 2000. Targeting public investments by agro-ecological zone to achieve growth and poverty alleviation goals in rural India. Food Policy 25: 411-28.

Heath, John, and Hans Binswanger. 1998. Policy-Induced Effects of Natural Resource Degradation: The Case of Colombia. Agriculture and the Environment: Perspectives on Sustainable Rural Development. Editor Ernst Lutz, 22-34. Washington, D.C.: IBRD/The World Bank.

Abstract: The joint occurrence of population growth in rural areas, rural poverty, and degradation of natural resources used by the poor has produced the perception that population growth and poverty in rural areas are the source of natural resource degradation. The Boserup hypothesis is examined in counteracting this notion, suggesting that higher population and market access lead to improvement -not deterioration of-natural resources. This article argues that current policies that favor the modernization of large-scale farming do so at the expense of more proficient and employee-concentrated family farms. These policies have evolved from the rural elite who hold much political pull and who have vested interests in maintaining current policies. Unfair representation of the rural poor in the political process and a lack of checks and balances in agricultural policymaking, remain barriers in eliminating these policies.
Abstract by: UES, CSF

Hulme, David. 1999. Impact Assessment Methodologies for Microfinance: Theory, Experience and Better Practice. Manchester: Institute for Development Policy and Management (IDPM).
Electronic version: http://www.eldis.org

Abstract: Microfinance programs and institutions are increasingly important in development strategies but knowledge about their impacts is partial and contested. This paper reviews the methodological options for the impact assessment (IA) of microfinance. Following a discussion of the varying objectives of IA it examines the choice of conceptual frameworks and presents three paradigms of impact assessment: the scientific method, the humanities tradition and participatory learning and action (PLA). Key issues and lessons in the practice of microfinance IAs are then explored and it is argued that the central issue in IA design is how to combine different methodological approaches so that a 'fit' is achieved between IA objectives, program context and the constraints of IA costs, human resources and timing. The conclusion argues for a greater focus on internal impact monitoring by microfinance institutions.
Abstract by: Author

Hulme, David, and Paul Mosley. 1996. Finance Against Poverty. London, England: Routledge.

Abstract: The theory, advocated since the 1980s by development theorists, that the provision of small loans to micro-entrepreneurs is an effective policy instrument is examined through the use of seven case studies. Detailed comparative data are presented from: Bangladesh, Bolivia, India, Indonesia, Kenya, Malawi, and Sri Lanka. Twelve institutions from these seven countries are examined, with the studies following a broadly similar format: historical and institutional background, financial performance over time, direct effects on incomes, employment and technology, indirect effects on other borrowers and lenders.
Abstract by: CABI

Huppi, Monika, and Gershon Feder. 1990. The Role of Groups and Credit Cooperatives in Rural Lending. World Bank Research Observer-IBRD - World Bank 5, no. 2: 187-204.

Abstract: The article indicates that successful group lending schemes work well with groups that are homogeneous and jointly liable for defaults. The practice of denying credit to all group members in case of default is the most effective and least costly way of enforcing joint liability. Another way to encourage members to repay is to require mandatory deposits that are reimbursed only when all borrowers repay their loans. The article points out that credit cooperatives that mobilize savings deposits are less dependent on external sources and increase the borrowers’ incentive to repay. The success of credit cooperatives requires training of members as well as management. Experience suggests that credit cooperative should not expand their activities beyond financial intermediation until they develop strong institutional and managerial capabilities.
Abstract by: Author

International Fund for Agricultural Development. 2002. The Rural Poor - Survival or a Better Life? Johannesburg, South Africa: IFAD for the World Summit on Sustainable Development.
Electronic version: http://www.ifad.org/events/wssd/e/index.htm

Abstract: Poor people preoccupied with surviving today do not have the liberty of providing for the future. Gaining food now is their major concern, not tomorrow’s depletion of resources. There are 1.2 billion people living in extreme poverty, and of these, 900 million live in rural areas where they depend directly or indirectly on agriculture to survive. Thus rural poverty must be given priority if the Millennium Development Goals (MDGs) are to be met. Sustainable rural development requires resolution of the twin challenges of poverty and environmental degradation.
Abstract by: IFAD

Izumida, Yoichi, and Pham Duong. 2001. Measuring the Progress of Rural Finance in Vietnam. Savings and Development 25, no. 2: 139-66.

Abstract: This paper attempts to measure the progress of rural finance in Vietnam by using data obtained from rural financial institutions as well as from a survey of 100 households each in the provinces of Ninh Binh, Quang Ngai and An Giang. Conventional theory of rural development finance tells that rural finance in low income countries generally has many inherent failures such as low levels of loan recovery, insufficient savings mobilization, high transaction costs, and distribution bias to relatively wealthier customers. Contrary to the theory, the rural finance in Vietnam did not encounter the above-mentioned failures so far. The development of rural finance in Vietnam after the reform could be regarded as a success. Hence, in order to refer the relevance of the theory of rural development finance, examining factors for the success in Vietnam is of great worth to draw policy implications for rural finance in low income countries.
Abstract by: CABI

Jimenez, Emmanual. 1995. Human and Physical Infrastructure: Public Investment and Pricing Policies in Developing Countries. Handbook of Development Economics 3B: 2773-843.

Kabeer, Naila. 1998. Credit where credit's due: can't micro-loans do more for India's poor? UK: UK DFID.
Electronic version: http://www.id21.org/society/NH1B1.html

Abstract: Have micro-credit programmes succeeded in meeting the needs of the poor? Are non-governmental organisations (NGOs) such as aid charities or private credit unions, better than governments at reducing poverty by bankrolling grassroots enterprise? Though poor people tend to trust official schemes less, both types of credit programme in India have shown a tendency to overlook poor people's needs by failing to recognise how complex and variable a handicap poverty can be, especially for women. A wealth of policy lessons can be learned by analysing how these schemes are designed and delivered, with a spotlight on how they define or profile poverty.
Abstract by: Eldis

Kannapiran, Chinna. 1995. Institutional rural finance: lessons from the past and reforms for the future . Pacific Economic Bulletin 10, no. 1: 48-54.

Abstract: Failure of institutional rural finance to adequately provide finance to agriculture has resulted in the exploration of idea of commodity based credit through the existing banking system. The paper examines the problems experienced by the Rural Development Bank, and its current status, before presenting some ideas for experimenting with new models. It notes that in such models careful evaluation would be required, of the financial policy, institutional policies, the viability of the credit operation, the resource for lending, managerial capacity, the viability of the rural sector, and the moral ethics and willingness to repay bank loans. Needed changes relate to institutional and policy reforms, and to banking regulation policy.
Abstract by: CABI

———. 1994. Sustainable Rural Credit for Agricultural Development in PNG. Papua New Guinea Journal of Agriculture, Forestry and Fisheries 37, no. 1: 104-16.

Abstract: Viable rural finance services ensure that credit is accessible at market determined rates. Market failures, agricultural sector failures, structural weakness of farming, inappropriate and high cost delivery system, and non-availability of infrastructure and support services can affect the sustainability of rural financial systems. Possible policy options to address these problems include regulation of credit operations in the short to medium term, low cost institutional credit, rural savings mobilization, insurance and credit guarantee schemes, land reforms, and improved infrastructure and support services.
Abstract by: CABI, CSF

Karmakar, K G. 1999. Rural Credit and Self-Help Groups: Micro-finance needs and concepts in India. London, England: Sage Publications.

Abstract: The book reviews the existing rural credit system in India, analyses its strengths and weaknesses, and prescribes various strategies and innovations which will enable the existing credit delivery system to emerge stronger and more viable. In the first section the book reviews the problems and prospects for rural credit in the context of its ascribed role in rural development; traces the evolution and growth of the rural credit delivery system; analyses the problems associated with credit recycling and overdues; and discusses the recommendations of various committees. In part II, the book discusses the microfinance needs of various groups including tribals, the rural non-farm sector, rural women and micro-finance entrepreneurs. Part III focuses on the concept and functions of self-help groups with special reference to the BAAC system in Thailand and the Grameen Bank in Bangladesh. It is argued that these initiatives need to be replicated far and wide in order to ensure that the rural poor do not remain marginalized forever. The concluding section outlines strategies for developing a sustainable rural credit delivery system in developing countries.
Abstract by: CABI

Kawai, Shinji. 1999. The Groundwork for Agricultural Co-operative Finance in a Transition Economy. Agricultural Finance and Credit Infrastructure in Transition Economies: Proceedings of OECD Expert Meeting, Moscow, Feb. 1999., 141-47. Moscow: O.E.C.D.

Abstract: For transition economies, where farming is centered around relatively small farms or groups of small farms, organization into co-operatives will be effective. Credit co-operatives can help farmers prepare farm plans and instruct them on borrowing at their own risk and the process of loan repayment. Agricultural credit co-operatives provide incentives to save and promote the recycling of funds in the farming sector. The experience of the credit union in the Kyrgyz Republic provides a good example.
Abstract by: Author, CSF

Khan, Rao A R. 1992. Role of Credit in Enhancing Productivity and Employment in Rural Sector. Journal of Rural Development and Administration 23, no. 4: 103-10.

Abstract: The objectives of rural finance provided by banks are to bring about improvement in the economic status of the rural poor, a good rate of repayment to the banks and increasing saving potential for further growth. In developing countries, the majority of the population depend on agriculture and rural activities, and is comprised of a large number of small farmers. There are few borrowers from the rural areas who can make good use of credit and derive benefits from it, because of their low level of literacy, consumption needs, poor access to various services and lack of marketing skills. They are often tempted to sell their assets due to urgent needs. Some credit requirements are given. Pakistan's economy relies on agriculture for 45% of its exports. However, employment possibilities in the rural areas are decreasing, particularly with seasonality. Credit is one of the inputs that can be used to achieve the objectives of agricultural development, although credit alone cannot act as the prime mover. The factors which impede productivity growth, coupled with the problems of unemployment and low labour productivity in Pakistan, are discussed. Banks and financial institutions have to provide finance by mobilizing local resources to transfer savings for investment, or the public sector needs to mobilize agricultural surpluses by fiscal and commercial policies to invest in both the agricultural and non-agricultural sectors.
Abstract by: CABI

Khan, Shoaib Sultan. 1992. Nongovernmental organization alternatives and fresh initiatives in extension: the Aga Khan Rural Support Programme experience. Public and Private Roles in Agricultural Development. Proceedings of the Twelfth Agricultural Sector Symposium., 249-61. Washington, DC: World Bank.

Abstract: This paper examines the Aga Khan Rural Support Programme (AKRSP), established in Pakistan in the early 1980s, which is an experiment which demonstrates how governments can launch countryside development and extension programmes in an effective and equitable way. The AKRSP relies on fostering rural cadres of extension workers from within the beneficiaries to undertake the job. The most important requirement however is a framework of grassroots institutions. The role and operation of the AKRSP is discussed, with particular attention given to its role in organization, the fostering of equitable and democratic development, the question of replicability of development programmes, leadership and accountability, linkages with other institutions, womens' role in development, and difficulties faced.
Abstract by: CABI

Kherallah, Mylene, Christopher Delgado, Eleni Gabri-Madhin, Nicholas Minot, and Michael Johnson. 2000. The Road Half Traveled: Agricultural Market Reform in Sub-Saharan Africa. Food Policy Report ed. Washington, D.C.: International Food Policy Research Institute.
Electronic version: http://www.ifpri.org/pubs/fpr/fpr10.pdf

Abstract: Although, the reform efforts in Sub-Saharan Africa in the 1980s and 1990s generated positive results, the programs left much to be addressed. The reforms intended to reverse declining growth rates and reverse balance-of-payment deficits, but despite the progress that was made, the outcome of the market reform did not meet expectations. The reforms gave little attention to developing institutions essential to support the private sector and put most emphasis on eradicating government control and raising producer prices of tradable agricultural commodities. Despite improvements in private trade, the private sector continues to struggle with supplying credit and marketing services in remote areas. Budget cuts in communication and infrastructure, lack of government support, an inefficient process in implementing reforms, and other exogenous factors all pose much risk to traders in the region. This report examines the effects of reform on market performance, agricultural production, use of modern inputs, and poverty, and offers recommendations for creating a new agenda for agricultural markets and the reform process.
Abstract by: UES, CSF

Kracht, Uwe, and Manfred Schulz. 1999. Food Security and Nutrition: The Global Challenge. New York: St Martin's Press.

Krafft, N. J. 1996. Agricultural and Rural Finance: Some Thoughts on the Road Ahead. Agrekon 35, no. 4: 211-17.

Abstract: The role of government in developing rural financial markets is explored with particular reference to South Africa. Some general comments on the Strauss Commission report are presented. The role of credit as a constraint to development is explored and the legal and regulatory framework for rural financial markets is examined. The proposed new Land Bank for South Africa is discussed along with successful rural financial schemes and prospects for the future.
Abstract by: CABI

Lin, Justin Y., and Zhou Li. 1995. Current Issues in China's Rural Areas. Oxford Review of Economic Policy 11, no. 4: 85-96.

Abstract: The paper conducts an assessment of current issues in China's rural areas, analyses their causes and proposes some possible solutions. The main problems that China currently faces with regard to its rural areas, agriculture and peasant's livelihood are the stagnation of income growth of peasants, the expanding of income gaps across regions, and the huge increases in grain prices. These problems have been brought about as a result of market imperfections during the transition to a socialist market economic system and the inconsistency of government policies. The solution of these problems relies on intensifying and deepening market-oriented reforms. The main measure to increase peasant income and to narrow regional income gaps is to establish nationally integrated product and factor markets. In order to solve the long term grain production problem scientific research centred on breeding technology capable of developing new strains is needed. In order to promote rural development it is recommended that the government abolish the system of monopoly for grain purchase and marketing and the policy of regional autarky in grain. There is also a need to reform the system of residency registration, land use and rural finance. The construction of infrastructure, rural education and market information systems should also be strengthened.
Abstract by: CABI

Lutz, Ernst. 2000. Agriculture and the Environment: Perspectives on Sustainable Rural Development. Washington, DC: IBRD.

Marr, Ana. 1999. The Poor and their Money: what have we learned? ODI Poverty Brief ed.Overseas Development Institute .
Electronic version: http://www.odi.org.uk/briefing/pov4.html

Abstract: Money markets ought to allocate finance where it is most needed, and thus contribute to greater productivity, employment and the reduction of poverty. Yet in practice they have not performed this function at all well. Vast segments of the population are still unserved, inappropriate financial services are offered and inflexible contracts are extended. Poor farmers and small businesses are generally excluded from conventional financial institutions like the big commercial banks, and have to resort to informal ways of saving, insuring and borrowing, such as paying shopkeepers to keep their savings safely, or borrowing from moneylenders at very high interest rates. What then are the obstacles to better access by the poor to finance in these markets and how can governments and aid agencies intervene to improve matters?
Abstract by: Eldis

Maurer, Klaus. 1999. Bank Rakyat Indonesia (BRI); Indonesia (case study). Eschborn, Germany: CGAP Working Group on Savings Mobilization .
Electronic version: http://www.cgap.org/assets/images/bri.PDF

Abstract: Using Bank Rakyat Indonesia (BRI) of Indonesia as a case study, this paper presents the findings of the Consultative Group to Assist the Poorest (CGAP) on savings mobilisation. Overviews the macroeconomic context of Indonesia, the financial sector, and the social and cultural context. Undertakes institutional analysis of the BRI Unit Desa system, particularly of its characteristics, governance and organisational structures. Explores its demand-oriented savings products and technologies. Specifically looks at the characteristics of a set of four deposit instruments (SIMPEDES, TABANAS, DEPOSITO, and GIRO) designed to meet different types of demand.
Abstract by: Author

Mayoux, L. 2001. Micro-finance and the empowerment of women: a review of the key issues.Microsave-Africa.
Electronic version: http://www.ilo.org/public/english/employment/finance/papers/
mayoux.htm

Abstract: Looks at the links between micro-finance and women's empowerment within the context of the debate about gender mainstreaming. The paper is based on research by the author and secondary source material. 15 case studies form the main basis of the arguments. The paper concludes that women's empowerment needs to be an integral part of policies. Empowerment cannot be assumed to be an automatic outcome of micro-finance programmes, whether designed for financial sustainability or poverty targeting. More research and innovation on conditions of micro-finance delivery is needed.
The paper finds that cost-effective ways of integrating micro-finance with other empowerment interventions, including group development and complementary services are still lacking. Unless empowerment is an integral part of the planning process, the rapid expansion of micro-finance is unlikely to make more than a limited contribution to empowerment.
Abstract by: Author

Mellor, John W. 1995. Some Issues in Institutional Finance for Agricultural Development: A Cross-National Review of Evidence. The Pakistan Development Review 34, no. 4: 509-42.

Abstract: The development of appropriate rural financial institutions in Pakistan can greatly facilitate the process of economic development. Such institutions, if developed along the lines outlined above, would enable the mobilization of savings deposits, thus providing banks with the necessary resources to undertake rural lending. This would also enable transactions costs to be reduced by spreading overheads. Increased competition will lead to better administration and hence reduced overheads and improved repayments on loans. The greater access by the small farmers would allow for high volume and high branch density. The easing of the credit constraints on small farmers will have positive effect on efficiency, employment, and equity. A well-functioning rural financial sector will also reach out to the private sector operating in the distribution of inputs and the processing and marketing of outputs. The increased volume of activity will result in reducing the overheads of the rural financial institutions while increasing the level of economic activity in the rural sector both directly and indirectly through the linkage effects.
Abstract by: Author

Meyer, Richard. 2002. The Demand for Flexible Microfinance Products: Lessons from Bangladesh. Journal of International Development 14, no. 3: 351-68.

Abstract: This paper examines literature that shows the decline in horizontal expansion of microfinance in Bangladesh. Dropouts, overlaps and delinquencies appear to be rising, many of the poor refuse to use microfinance institution products and informal sources continue to be important for poor households. In order to combat these challenges, MFIs need to re-engineer their products and policies, based on careful market research and pilot testing, and focus on quality of service rather than quantity of outreach. Possible changes in policy and products include: a) adjustment of repayment schedules, b) adjustment of loan sizes, c) differential loan pricing and d) expansion of product line. Impediments to these changes may result from any of the following: commitment to the status quo, cost and complexity of change and innovation, competition and the financial system. While the MFIs in Bangladesh have enjoyed a reputation as leaders in the microfinance industry, they now need to move into the next phase of supplying demand-driven financial services.
Abstract by: CSF

———. 2002. Performance of Rural Financial Markets: Comparative Observations from Asia, Latin America and the US. Brazil: Brazilian Agricultural Economics Association.

Abstract: After three decades of rural financial market failure in Latin America and Asia, a renewed interest has developed. Discussion of the formation of new specialized agricultural banks neglects to consider the successes and failures of past initiatives in this area. This paper explores the existing challenges for creating sound rural finance markets to serve farmers and the rural community not serviced by microfinance. In the past, agricultural economists have focused on farmer access to financial services; terms, conditions, and institutional operation. Other research has shown how sound macrofinance policies, supportive institutions, and investments in institutional building can lower the costs and risks of rural financial intermediation. Improvements in laws, regulations, institutions, and policies in financial intermediation in Latin America must be made before rural communities will have access to self-sustainable financial services. Until these changes are made, Latin American farmers will remain at a proportional disadvantage in financial services.
Abstract by: UES, CSF

Meyer, Richard, and Geetha Nagarajan. 2000. Rural Financial Markets in Asia: Policies, Paradigms, and Performance. New York: Oxford University Press.

Abstract: A vast majority of the population in rural Asia are micro-entrepreneurs: farmers, shopkeepers, food processors, traders, and small-scale manufacturers. Despite significant income growth in the last 30 years, many of them remain poor; about 670 million rural Asians still live in poverty and continue to rely, directly or indirectly, on agriculture for their livelihoods. Like other entrepreneurs, rural Asians, including farmers, require access to dependable and well designed financial services in order to better manage and expand their businesses. Without this access, many poor entrepreneurs are simply unable to take advantage of new market opportunities that public investments and/or market reforms provide. But conditions conducive to the rapid development of modern financial institutions are generally lacking in rural areas. Farmers are dispersed over wide areas and information on creditworthiness or project-specific risks is costly to collect, making general risk assessment expensive. Poor households lack collateral-suitable assets, transactions are small and expensive to administer, and business risks, especially in agriculture, are highly covariant. Matters are further complicated in transition countries such as those in central Asia where private ownership of capital and market-based production and exchange were introduced only in the 1990s. No wonder, then, that private sector banks have not bothered to set up shop in rural areas, and in cases where they have been arm-twisted by governments to do so, they have done so at considerable financial loss. Given this situation, how should policy makers go about contemplating rural financial policies in the 21^st century in Asia? This is the fundamental question that Meyer and Nagarajan attempt to answer. They do so by considering other important questions: How do agricultural markets interact with financial markets? What have recent country experiences been like, and what can we learn from them? How have policy paradigms emerged, played out, and changed? How have institutions responded, and what lessons do they provide for the future? While there has been no dearth of writings on the topic of rural finance in the last 20 years or so, this book is clearly unique in attempting an all-Asia generalisation. The book itself is the third in a five-volume A Study of Rural Asia series commissioned by the Asian Development Bank, and draws largely on materials gathered from six country studies conducted specifically for the purpose. Its 12 chapters are divided into two main parts. The five chapters in Part A lay out study objectives, a conceptual framework, and the principal findings from an analytical synthesis of the six country studies, concluding with the chapter Developing Rural Financial Markets Asia: What Should be Done?”. Readers interested in obtaining an overall assessment, but who prefer not to get into country-level details, can easily stop reading here: the main arguments have been presented, useful evidence has been summarised, and final conclusions have been drawn. Part B of the book, rather like an annex, presents the country case studies themselves. These studies are rich in detail and will be useful to many readers, especially those seeking information on the selected countries. The countries chosen are: Bangladesh and India in South Asia (“poor, densely populated” countries where “the state has intervened heavily in the their financial sectors”); Kyrgyz Republic and China (Central Asian countries ‘in transition’), and Indonesia and Thailand (rapid growth economies recently hit by a financial and economic crisis, but “known worldwide for having developed rural financial institutions that today serve millions of clients with a minimum of subsidies”). Three ‘flagship’ organizations are singled out as worthy to learn from: Bank for Agriculture and Agricultural Cooperatives (Thailand), Bank Rayat Indonesia (Indonesia), and Grameen Bank (Bangladesh). The book, however, does not address clients’ perspectives anywhere. The authors suggest that, historically, policy intervention in the Asian rural financial sector was rooted in agricultural finance, responding to the general assessment in the 1960s and the 1970s that credit frequently subsidised credit was necessary to enable small farmers to adopt risky new crop technologies and also to push them over to commercial (as opposed to subsistence) agriculture. Most now agree that this type of ‘directed’ and ‘subsidised’ credit administered through government owned-commercial banks failed miserably, and the authors provide an interesting discussion on whether or not these institutions should now be closed or rehabilitated. However, richer lessons might have been drawn had the authors been able to disentangle the confounding effects of targeting, subsidisation, perverse incentives within government bureaucracies, and the on-the-ground realities of poor small farmers. Rural finance enthusiasts will have no problem embracing, as the authors do, a zero-tolerance position on poor repayment performance, administrative laxity, substandard or opaque accounting practices, and the iniquitous political capture of programs and institutions. But an indiscriminate lumping of these issues with those related to targeting and/or the use of public resources is another matter. Directing financial services to small farmers when market failures are known to abound is not itself an intrinsically bad idea. Throwing this otherwise healthy baby of an idea away with the dirty bath waters of organisational weakness and political corruption has the effect of undermining some of the important conclusions reached in the book. The authors would have done better had they instead investigated and highlighted the main threads linking these problems. The subsidy issue is also somewhat summarily tossed out, leaving the reader with the impression that it naturally and invariably contributes to a lack of discipline on the part of both providers and borrowers. Many will find this assessment not all that helpful in dealing with an industry that would literally vanish if not for public funding. For the authors, though, this is key advice, one that leads to the fundamental conclusion of the book: sustainable rural financial systems have to be market-based, and market reform and strengthening rather than any kind of social engineering is the best way forward. Hammering and re-hammering this central message is what the book does best.
At the core of the authors’ recommendation is a three-pronged strategy for building rural financial markets: (1) creation of a conducive policy environment (ensure sound macroeconomic management and un-repress the financial sector), (2) build financial infrastructure (build and implement legal, regulatory and information systems that make financial transactions less risky for both providers and users), and (3) nurture financial institutions that combine good client outreach with financially sustainable services. All this is genuinely sound advice: competitive and market-based financial institutions are highly unlikely to emerge under any other policy regime. But what is the timeline of such development and what are its practical implications? Why have non-profit institutions taken a more immediate and, by all standards, a totally overwhelming role? What makes them do what they do? Is there a case, in the intermediate stage, to balance market-reform and market-strengthening policies with institutional initiatives that skirt around stubborn market failures? If yes, how? If not, why not? What lessons do the generally buoyant informal financial markets in rural Asia offer in all this? Readers, particularly those working with institutions like the Asian Development Bank, would have benefited significantly more had the book delved deeper into such issues. The book is nonetheless an essential read for those interested in the current state of the Asian rural financial sector, doubly so if you happen to be interested in what is going on in Bangladesh, China, India, Indonesia, the Kyrgyz Republic, or Thailand.
Abstract by: Manohar Sharma

Mosley, Paul. 1999. Micro-macro linkages in financial markets: The impact of financial liberalisation on access to rural credit in four African countries. Manchester, UK: Institute of Development Policy Management .
Electronic version: http://idpm.man.ac.uk/wp/fd/fdwp04abs.htm

Abstract: Almost every programme of economic reform contains a financial liberalisation component; but little work has been done to assess the effects of financial liberalisation on access to credit in individual markets. Paper presents a model of this linkage, which predicts that conventional financial de-repression will have no significant effect on the price and availability of credit in the informal sector, but that financial innovation in the informal sector will affect such availability considerably. Tests this proposition specifically against data for the period of financial reform in four African countries: Uganda, Kenya, Malawi and Lesotho. Such reforms had significant effects on interest rates, but except in Uganda these effects did not feed through into an increase in savings rates or in access to rural credit. Such access was, however, favourably influenced by institutional innovation on the supply side of the market for small-business and small-farm credit. Likewise, in two of the case-study countries - Malawi and Uganda - financial de-repression had insignificant effects on poverty and privatisation of the bottom end of the credit market on its own had disastrous effects, but expansion of the supply of smallholder credit had a highly positive poverty-reduction effect.
Abstract by: Author

Munnel, Alicia H. 1992. Infrastructure Investment and Economic growth. Journal of Economic Perspective 6, no. 4: 189-98.

Mushinski, David. 1999. An Analysis of Offer Functions of Banks and Credit Unions in Guatamala. Journal of Development Studies 36, no. 2: 88-112.

Abstract: Economists have sought to identify institutions which might fill the gap in household access to credit arising from rationing by formal lenders. Credit unions have been identified as institutions which might use informational and monitoring advantages to fill that gap. Using information on household perceptions of their access to credit, this article analyses the impact of certain credit unions on the access to credit unions in Guatemala. Regression results indicate that credit unions serve markets unserved by formal lenders and that information on household perceptions of their access to credit is important in making inferences about lender lending activities.
Abstract by: Author

Narayan, Deepa. 1998. Participatory Rural Development. Agriculture and the Environment: Perspectives on Sustainable Rural Development. Editor Ernst Lutz, 103-17. Washington, D.C.: IBRD/The World Bank.

Abstract: Participatory rural development, where the community joins together in effort of achieving common goals, is an alternative institutional option for countries struggling with government success in managing natural resources, providing basic infrastructure, and ensuring social services. In an attempt to increase efficiency, productivity, and investment, the demand-driven approach moves away from a central command-and-control system to greater local management of resources and services. This article examines the five key factors that must be in place for successful community-driven development: local organizational capacity and viable community groups; appropriate fit of technology to community capacity; effective outreach strategies; client responsive agencies; and enabling policies. A comprehensive understanding of household and community level dynamics is required to succeed on a large scale. External support for regulation and investment is necessary. In summary, agencies will need to amend current policies to meet the needs of the community.
Abstract by: UES, CSF

Norsworthy, L. A. 2000. Rural Development, Natural Resources and the Environment: Lessons of experience in Eastern Europe and Central America. Washington, DC: IBRD.

OECD. 1999. Agricultural Finance and Credit Infrastructure in Transition Economies: Proceedings of OECD Expert Meeting, Moscow, Feb. 1999. Paris: OECD.

Okoye, C. U. 1998. Assessing the participatory aspects of credit 0rogrammes: Evidence from a village adoption scheme in Nigeria. Development Policy Review 16: 115-30.

Abstract: This paper draws on the experience of a rural credit programme (the Village Adoption Scheme (VAS) in Anambra state, Nigeria) to explore how participation can remove some of the acknowledged causes of failure in rural finance institutions and credit programmes. Under the VAS, eligible farmer groups are 'adopted' by lending institutions and other private sector organizations. In particular, the paper discusses: the concept and principles of participation; participation as a measure of success in credit programmes; how the VAS framework addresses rural finance institution and credit programme problems (screening of borrowers, monitoring, supervision and enforcement, information asymmetries, missing and incomplete markets); problems in the VAS approach (traditional participative ethics, rigidity of stakeholders' management ethics, higher risk from widening the scope of participation, and apathy). Lessons learned and recommendations are made.
Abstract by: CABI

Otero, Maria, and Elisabeth Rhyne. 1994. The New World of Microenterprise Finance: Building Healthy Financial Institutions for the Poor. Connecticut, USA: Kumarian Press.

Abstract: This book looks at several ideas which have been crucial to the transformation of microenterprise finance. Chapter 1 (Rhyne and Otero) introduces the major ingredients necessary for the development of a financial systems approach. In chapter 2, M.S. Robinson looks at the way savings are the sustaining part of local finance and examines the explosive growth of savings in Indonesia, made possible by the crafting of convenient, safe and liquid voluntary savings instruments for the Bank Rakyat Indonesia's unit banking system. Chapter 3 (R.A. Chaves and C. Gonzalez-Vega), outlines financial sector regulation and supervision into a primer for microenterprise professionals and addresses how these issues may intersect with the characteristics of microenterprise finance organizations. Chapter 4 (E.L. Edgcomb and J. Cawley) develops a framework for thinking through the key institutional challenges microenterprise development organizations face as they move from their initial planning into implementation, growth and expansion. In chapter 5, Otero focuses on those institutions that have reached the takeoff point and need to transform themselves into financial institutions. Rhyne argues, in chapter 6, that evaluations of microenterprise finance programmes should reflect the new financial systems perspective and lays out an evaluation framework that departs from the traditional concern with the impact on beneficiaries and advocates a focus on the quality of financial services and the capacity of institutions to achieve scale and self sufficiency. Part 2 examines several of the leading methodologies for providing financial services to microenterprises. Chapter 7 (S. Berenbach and D. Guzman) addresses the solidarity group experience worldwide. In chapter 8, J.H. Magill examines credit unions, formal-sector alternatives for financing microenterprise development. Chapter 9 (S.L. Holt) looks at the village bank methodology. In chapter 10, L.R. Reed and D.R. Befus describe how transformation lending can help microenterprises to become small businesses. Part 3 examines case studies of four microenterprise finance institutions representing Asia, Africa and Latin America. In chapter 11, J.J. Boomgard and K.J. Angell document the Bank Rakyat Indonesia's Unit Desa system and explains the factors that lead to its success. Chapter 12 (A.J. Glosser), describes the transformation of PRODEM, a successful solidarity group programme in Bolivia, into BancoSol, a commercial bank devoted to microenterprises. Chapter 13 (A. Gomez Alfonso, N. Borton and C. Castello) reviews the evolution of an NGO using the solidarity group method in Colombia using the ACCION model. In chapter 14, A.K. Kimanthi Mutua examines the Juhudi Credit System, in Kenya, a modified Grameen Bank model.
Abstract by: CABI

Patten, Richard H., and Jay K. Rosengard. 1991. Progress with Profits: The Development of Rural Banking in Indonesia. California, USA: International Center for Economic Growth and Harvard Institute for International Development.

Paulson, J. A., and J. McAndrews. 1999. Financial Services for the Urban Poor: Standard Bank of South Africa’s E-Plan: Africa Region Findings.World Bank.
Electronic version: http://www.worldbank.org/afr/findings/english/find134.htm

Abstract: The E-Plan program demonstrates how a commercial bank can use market information to bundle services for low-income clients. The most notable feature of Standard Bank’s E-Plan, and perhaps its most important lesson in providing basic banking services, has been the focus on demand enhancement. By re-thinking the needs of the basic banking customer, i.e. the demand side, a new product emerged that has proven to be valuable to the low-income consumer, while providing a way to lower the costs of offering the service. The delivery system is not ‘cheap’ and the plan relies heavily on service charges to cover costs. But the experience has shown that even low-balance customers can be profitable for banks, and the E-Plan has continued to expand and add financial services for the poor. That lesson should be borne in mind when trying to provide basic financial services for the poor.
Abstract by: Eldis

Pedersen. P.O. 1998. Business services in the Globalizing African economies. Copenhagen, Denmark: Centre for Development Research (CDR).
Electronic version: http://www.cdr.dk/working_papers/wp-98-15.htm

Abstract: Discusses the role of business services in the economy in general and especially in the low-income African economies. At the global level large transnational business service firms are developing global service networks linking the world’s large cities together and serving especially the large transnational companies, but apparently largely by-passing Africa. At the local level in Africa structural adjustment policies to create a so-called enabling environment have resulted in donor and NGO initiatives to develop local business services catering for small and medium-sized enterprises. In donor policies the two levels of business services tend to be seen as unrelated in spite of the fact that donors in the low-income countries are major actors in both.
Abstract by: Author

Puetz, Detlev, and Joachim Von Braun. 1991. Parallel Markets and the Rural Poor in a West African Setting. Markets in Developing Countries: Parallel, Fragmented, and Black. Michael Roemer, and Christine Jones, 29-45. California: ICS Press.

Abstract: There is a widespread dissatisfaction with the intervention of parastatal and public sector institution in agricultural output procurement and input supply, especially in the sub-Saharan Africa. The situation in The Gambia, West Africa-the case analyzed in this paper-is no exception. This chapter explains three basic issues in the context of the complex reality of parallel market structures. First, official and parallel markets coexist because of both price and nonprice factors. Second, specific circumstances may, even in the context of prevailing parallel markets structures, prevent efficient market clearing. Third, parallel market structures have an impact on income distribution, which depends on proximity to trading points, endowment of market participants, liquidity of the participants, and in an agricultural system in which production and marketing are influenced by gender differences in the division of labor and access to resources. The policy mix of half-hearted market liberalization, with rapid dismantling of existing public marketing channels and changing strategies toward export orientation, has led to frequent supply and demand imbalances. Here parallel markets can only partly compensate for government interventions and are certainly second best compared with a more market-oriented policy. Most noteworthy in this regard is the spiral of declining fertilizer use on many African countries such as The Gambia. A detailed look at the development of the fertilizer market suggests that the causes of this decline are more often policy failures than market failures.
Abstract by: CSF

Quisumbing, Agnes R., Lynn R. Brown, Lawrence Haddad, and Ruth Meinzen-Dick. 1998. The Importance of Gender Issues for Environmentally and Socially Sustainable Rural Development. Agriculture and the Environment: Perspectives on Sustainable Rural Development. Editor Ernst Lutz, 186-202. Washington, D.C.: IBRD-The World Bank.

Abstract: In the past, policy design for food, agriculture, and natural resource management in rural areas neglects to consider that rural men and women face different constraints, have differing preferences, and are motivated by different incentives. With the growing recognition of women’s contribution within the farming systems, the previous general assumption that male heads of households make most decisions is now challenged. This literature suggests that failure to recognize gender asymmetries has both short-term and long-term costs. Despite the compelling evidence that acknowledging and mitigating gender asymmetries is effective, gender analysis is not yet widely used for policy analysis or by those who implement and design projects.
Abstract by: UES, CSF

Reardon, T., C Barrett, V. Kelly, and K. Savadogo. 1999. Policy reforms and sustainable agricultural intensification in Africa. Utah, USA: Pastoral Risk Management Project, SR/GL CRSP-Utah State University.
Electronic version: http://www.cnr.usu.edu/research/crsp/dpr.pdf

Abstract: In an exceedingly capital-constrained continent, sustainable agricultural intensification is clearly a challenge, and at present most African smallholders appear not to be choosing sustainable paths. This article focuses on two policy research questions:
· what role have market-oriented policy reforms, commonly associated with structural adjustment programs, played in pushing African farmers toward or diverting them from sustainable intensification?
· What policy actions are needed to address this gap?
Inappropriate policy reforms and weak markets can lead to either a failure to undertake necessary intensification – and therefore inevitably to extensification – or to an unsustainable form of intensification. Appropriate policies and reasonably functioning markets, on the other hand, can promote environmentally and economically sustainable intensification.
Abstract by: Eldis

Reed, Larry, and Peter Reiling, Opportunity International and TechnoServe, Inc. 1996. The role of NGOs [non-governmental organizations] in rural financial intermediation in Ghana. Washington, DC: USAID.
Electronic version: http://www.dec.org

Richardson, D. C. 2000. Unorthodox microfinance: the seven doctrines of success. Microbanking Bulletin ed.Calmeadow.
Electronic version: http://www.eldis.org

Abstract: Argues for a radical reform of the orthodox approach of using financial services to achieve poverty alleviation. prospect of a competitive market with different institutional players. Many credit unions are skeptical of conventional microfinance lore. Many are now focusing on commercial viability rather than on outreach.
Author offers seven doctrines for achieving poverty alleviation targets: a) Open Door Massification: serving a wider range of economic groups leads to better outreach, b) Micro-savings: MFI is less dependent on external funding and has higher liquidity for on-lending, c) Portfolio diversification: diversifying into work, housing, health, education, transport and security products. The MFI avoids risk of economic downturns in a single sector, d) Efficiency: better productivity helps MFIs compete with down-sizing commercial banks. Larger loans should contribute more to payment of fixed costs. Salary and incentive structures for staff should be re-evaluated, e) Financial discipline: better management of delinquency, loan-loss reserves, loan charge-offs, and reserves of capital and liquidity, f) Self governance: empowerment, matched by checks and balances of economic incentives, financial discipline and systematic vigilance, and g) Assimilation: poor people should be assimilated into the mainstream economy by providing them with access to comparable financial products and services.
Abstract by: Eldis

Riedinger, Jeffrey M. 1994. Innovation in Rural Finance: Indonesia's Badan Kredit Kecamatan Program. World Development 22, no. 3: 301-13.

Abstract: Donor agencies and governments are committing increasing resources to micro-enterprise credit programmes, much as the earlier funded rural credit. Yet few programmes embody the lessons from this earlier experience. Central Java's Badan Kredit Kecamatan (BKK) programme shows considerable promise in providing the access, convenience, and flexibility desired by poor borrowers while assuring the financial viability of the credit institution by minimizing administrative costs and imposing interest rates sufficient to cover costs and prevent capital erosion. Recent progress has also been made in mobilizing voluntary savings. Strong political support from the government has been crucial to the programme's success. The BKK was established in 1972 to provide fast, cheap and productive credit to the rural poor to finance activities that would complement and supplement their agricultural endeavours. The mandate of the BKK included a number of unique features, such as the level of access, gender neutrality and reduced incentives for 'rent-seeking' behaviour. The paper looks at some of the problems with the BKK programme, particularly the low interest seasonal loans, urban bank failures, delayed borrower repayments, insufficient village outreach and the risk of a reduction in participation by women. The model may not be transferable because of the conditions under which the BKK was established, as a direct response to political strife.
Abstract by: CABI

Robinson, Marguerite. 2001. The Microfinance Revolution: Sustainable Finance for the Poor. New York and Washington, DC: Open Society Institute and World Bank.

Abstract: This book offers readers: a detailed overview of the development of microfinance during the 1980s through the 1990s; a global view of microfinance in the developing world; a thesis on the future path of microfinance; a coherent theory about microfinance; details on a number of important microfinance topics, such as informal moneylending and savings; a study of Indonesia, with detailed analysis of Bank Rakyat Indonesia; and brief studies of many other microfinance institutions in Africa, Asia, and Latin America. The book contains 7 chapters and a subject index
Abstract by: CABI

Roemer, Michael, and Christine Jones. 1991. Markets in Developing Countries: Parallel, Fragmented and Black. San Francisco: ICS Press.

Abstract: In developing countries, where government intervention is often used as a tool to achieve economic and political goals, parallel markets arise as producers and consumers seek to evade official regulations in the agricultural and other sectors. This volume is based on a collection of papers presented at a workshop which addressed issue relating to such parallel markets. Several chapters delineate the economic and social contribution of parallel markets in sub-Saharan Africa, the Philippines, Taiwan and India, investigating the interaction between government policy and the behaviour of black and/or fragmented markets, the influence of cultural preferences on such markets and the capacity of parallel markets to increase economic efficiency and equity.
Abstract by: CABI

Ruben, Ruerd, and Johan Bastiaensen. 2000. Rural Development in Central America. New York: St Martin's Press.

Abstract: The book presents a comprehensive review of the current debate on the importance of 'real markets' in the Central American rural development process. The papers address the performance of agrarian commodity markets, the structure of rural land and financial markets, and the dynamics of rural labour markets. Major economic, socio-cultural, political and institutional dimensions of market and non-market configurations are highlighted. The detailed analysis of the understanding of markets by the peasantry reveals the importance of multiple exchange relations for peasants' livelihood strategies.
Abstract by: CABI

Ruben, Ruerd, and Marrit Van den Berg. 2000. Farmers' Selective Participation in Rural Markets: Off-Farm Employment in Honduras. Rural Development in Central America: Markets, Livelihoods and Local Governance. Ruerd Ruben, and Johan Bastiaensen, 189-209. New York: St. Martin's Press, Inc.

Abstract: The paper analyses the importance of the off-farm employment component of family income, and discusses the relevant farm and household characteristics that give rise to engagement in the rural labour market. While considering off-farm employment as a compensating device for limited access to rural financial and land markets, linkages between off-farm income, the use of credit and the mobilization of savings are highlighted. Moreover, expenditure effects are addressed through the discussion of the implications of off-farm income for household food security. Instead of looking at off-farm employment of small peasant households as only a secondary component, the paper focuses attention on wage income as a major element of the rural livelihood strategy that permits the maintenance of a survival strategy based on the combination of a number of complementary activities. This enables small farmers better to overcome limitations in the access to markets and favours the adoption of risk-sharing strategies that are considered typical for resource-poor households operating under conditions of selective market failure. The paper begins with a brief historical review of the structure of agricultural employment and the development of the rural factor and commodity markets in Honduras. Empirical evidence is presented, focusing on the internal farm and household characteristics that explain the relative importance of off-farm income in the process of household income formation.
Abstract by: CABI

Sacay, O. J., and B. K. Randhawa. 1995. Design Issues in Rural Finance: WB Discussion Paper, no. 293. Washington, DC: World Bank.

Abstract: The World Bank's policies as embedded in Operational Directive 8.30 have shifted from the fund transfer objectives of traditional agricultural credit projects to those of building viable financial institutions which operate within the purview of the rural financial market. However, this has presented a significant challenge and has had a negative impact on the volume of agricultural credit lending. The study was inspired by the need to learn how to design and implement realistic rural finance projects consistent with these policies. This study analyses all of the World Bank's on-going rural finance projects to arrive at best practices in project design, particularly with reference to the provisions of Operational Directive 8.30. Design features on on-going rural finance projects were compared to pinpoint best practices. In addition, design issues were identified and conclusions reached on these issues. On the basis of these conclusions, guidelines have been proposed to assist Bank staff in designing sound rural finance projects.
Abstract by: CABI

Safavian, Mehnaz, Barbara Breitschopf, Geetha Nagarajan, and Richard Meyer. 1998. Rural Finance for the Private Farm Sector in Romania: Obstacles and Opportunities. Economics and Sociology Occasional Paper 2514 ed. Columbis, Ohio: Rural Finance Program - OSU.

Abstract: This paper describes the manner in which the rural financial market and the private farm sector operate and interact. The state of the financial market, current lending conditions, and obstacles to credit flows on the supply and demand sides of the market are reviewed. We argue that there exists a preponderance of evidence which supports the notion that the limited number of observed credit transactions in the formal sector may be explained by restrictive factors on the demand side of the market. Thus, we challenge the conventional wisdom that Romanian farmers are credit rationed by lenders, and suggest that the limited frequency of credit transactions may be the result of economically rational decision making on the part of the farm households.
Abstract by: Author

Satish, P., and C. K. Gopalakrishna. 1997. Viability of Rural Banking. Economic and Political Weekly: 2711-16.

Abstract: The article considers the viability of rural banking and looks at the macro-level components of the financial structure of rural banking institutions. The profitability of rural commercial bank branches is studied using a sample of branches in four districts of Maharashtra. It is concluded that there is nothing intrinsically non-viable about rural banking operations or rural finance institutions. Suggestions are made for making rural banking operations or existing non-viable institutions or units viable.
Abstract by: CABI

SBP- World Bank. 1998. FINCA: Insights from a unique approach to village banking [in Costa Rica].World Bank.
Electronic version: http://www.eldis.org

Abstract: FINCA Costa Rica has been both a leader and a non-conformist in village banking. As one of the first village banking examples in Latin America, the program offers valuable lessons to other village banking institutions. While still retaining the FINCA name, FINCA Costa Rica has split from FINCA International, the US-based NGO that is credited with developing the village banking methodology. Some of the unique features of FINCA Costa Rica include: a minimalist approach to microfinance, a predominantly male, literate, agriculturally based target group, individual loans, a legal ownership structure of each village bank with voting based on percentage ownership of equity shares, relatively larger and longer loans, and legal penalties for default. The program leadership has shown a great willingness to adapt the methodology as problems have surfaced over the years. Given FINCA Costa Rica's history and willingness to adapt, it offers unique insights into the problems and potential of village banking. The following paper presents an overview of FINCA Costa Rica1 and examines ten lessons that can be learned from FINCA's unique approach to village banking.
Abstract by: Author

Schmidt, R. H., and B. W. Kropp. 1987. Rural Finance: Guiding Principles. Bonn, Germany: GTZ.

Abstract: The study shows how the German Agency for Technical Cooperation (GTZ), the German Foundation for International Development (DSE) and other German institutions for economic cooperation are in the process of reorienting their approaches and activities in accordance with the period of transition undergone by rural finance in developing countries over the last 10 years. Secondly, it offers an orientational framework which adopts, integrates, and makes these new developments accessible to all those persons who are working on the analysis, design and promotion of rural finance or are affected by it. After a general introduction, Chapter 2 discusses the concept of rural finance and the role of the rural financial system in rural development, the experience with promotion policy to date, and the goals and target groups of the promotion policy of the GFR. Chapter 3 outlines the conceptual model of a desirable and feasible rural financial system which benefits the poorer segments of the population. It is the conceptual model which serves as the basis for the economic cooperation measures offered by GTZ and DSE. The relevant parameters, financial activities and financial institutions are discussed in this context. Finally, Chapter 4 describes the promotion policy of GTZ. It shows under which conditions, with which goals and by which means GTZ can bring its experience to bear and implement its instruments for the promotion of rural finance in the interests of the target groups. The book is also published in German.
Abstract by: CABI

Schrieder, Gertrud. 2000. Poverty, Rural Financial Institution Building and Gender Sensitive Demand Analysis in the North-West and West Province of Cameroon. Savings and Development 24, no. 1: 95-110.

Abstract: Research on rural finance has devoted little attention to household preferences regarding financial services. Yet, part of the success of financial institution building depends on the potential clients' acceptance of the services offered. Cameroon's financial market shows the dualistic structure of an informal and formal sector, typical for most developing countries. Research on informal financial markets revealed that particular traits exist that distinguish them from their formal counterparts. From the 1980s onwards, rural financial institution building started to adopt instruments of informal financial intermediaries to strengthen their performance. Despite this, many programmes failed. This paper argues that the adoption of financial instruments in the informal market ought to be complemented by a forward analysis of households' requirement profiles for financial services. Conjoint analysis provides a powerful method to (1) predict client preferences and demand for financial service profiles; and to (2) involve the target group already in the pre-marketing phase of the financial institution building process. This paper concisely presents econometric results of an innovative Conjoint analysis application in the context of a preference analysis in a developing rural economy. The analysis is based on 356 interviews conducted in 1992 in seven villages of Cameroon. It quantitatively identifies the demand for specific financial service profiles and formulates policies oriented towards rural financial market development. Particular stress is laid on demand aspects in financial intermediation that relate to food security, thus, emphasizing rural women's demand structure. Also, concepts from the New Institution Economics are integrated in the discussion to interpret the findings of the empirical demand analysis.
Abstract by: CABI

Schrieder, Gertrud, and Franz Heidhues. 1995. Reaching the Poor through Financial Innovations. Quarterly Journal of International Agriculture 34, no. 2.

Abstract: The financial systems of developing countries are quite heterogeneous and have undergone substantial changes over the past two decades. The lessons learned from past formal financial market failures, the thriving of the informal market, the need to adapt to the general decline in foreign capital inflows, and the rapid changes in financial technology and banking praxis is leading most developing countries to reshape their financial market development approach. This paper discusses modifications in financial technology and banking praxis, referred to as financial innovations. Financial innovations are crucial in the economic development process. They can reduce the intermediaries' and the clients' transaction costs and as a result bring about widening, deepening and integration of financial markets. This process thereby accelerates economic growth by stimulating savings, investment and production. Despite the well perceived positive effects of financial innovations on economic development, the wide range of financial innovations that are anchored around different levels of the financial intermediation process (financial system, institution, processing, product) have neither been well defined nor classified in development economics. Nevertheless, there has been wide use of the term financial innovation. This paper attempts to clarify the innovation debate in development economics. It first defines and categorizes the diverse types of financial innovations and then discusses their impact on the rural financial markets' effectiveness to alleviate poverty.
Abstract by: CABI

Schrieder, Gertrud, and Franz Heidhues. 1995. Rural financial markets and the food security of the poor the case of Cameroon. Savings and Development 1-2: 131-54.

Schrieder, Gertrud, and Béatrice Knerr. 2000. Labour migration as a social security mechanism for smallholder households in Sub-Saharan Africa the case of Cameroon. Oxford Development Studies 28, no. 2: 223-36.

Schrieder, Gertrud, and Manohar Sharma. 1999. Impact of finance on poverty reduction and social capital formation a review and synthesis of empirical evidence. Savings and Development 23, no. 1: 67-93.

Schrieder, Gertrud, and Insa Theesfeld. 2000. Improving bankability of small farmers in northern Vietnam. Savings and Development 24, no. 4: 385-403.

Scoones, I. 2001. Science, policy and regulation: challenges for agricultural biotechnology in developing countries.Millenium Development Goals.
Electronic version: http://www.eldis.org

Abstract: This paper addresses the question of the relationship between science, policy and regulation in the context of debates about the future of agricultural biotechnology. First the paper outlines some of the challenges for biotechnology policy and regulation before exploring the different contexts for biotechnology science and the framing of the policy debate. Next the author examines in more depth notions of ‘sound science’ and ‘precaution’ in the context of risk assessment before the next section examines applications of science in biotechnology policy and regulation through a series of examples. Issues for developing countries are outlined and challenges identified for regulatory policy.
Abstract by: Eldis

Seibel, Hans Dieter. 1992. The Making of a Market Economy: Monetary Reform, Economic Transformation and Rural Finance in Vietnam. Saarbruken, Germany and Fort Lauderdale, Florida: Verlag Breitenbach Publishers.

Seibel, Hans Dieter. 2000. Reforming Agricultural Development Banks. Washington DC: IFAD.
Electronic version: http://www.microfinancegateway.org/cache/DMS51855-1.DOC

Abstract: The author states that agricultural development banks (AgDBs), which are not viable, should either be closed, or transformed into self-reliant, sustainable financial intermediaries.
Experience shows that reform is possible. Among the prominent cases are Bank Rakyat Indonesia (BRI) and Bank for Agriculture and Agricultural Cooperatives (BAAC, Thailand) as well as ADB/Nepal, which has been transforming its small farmer credit program into financially self-reliant local financial intermediaries owned and managed by the poor.
In Africa, many AgDBs have gone into liquidation; but there are some promising cases of reform, among them BNDA/Mali. Once the political will to reform has been generated, many more AgDBs have the potential of contributing to poverty alleviation through sustainable financial services.
Abstract by: Microfinance Gateway

Sharma, Manohar, Editor and contributor. 2000. MicroFinance : a pathway from poverty. Washington, DC: IFPRI, USAID.
Electronic version: http://www.dec.org/pdf_docs/PNACK951.pdf

Abstract: These summaries cover research results from a multicountry research program on rural finance policies for food security of the poor, 1994—2000.
Abstract by: Author

Simkhada, Nav Raj, Sushila Gautam, Mira Mishra, Ishwori Acharya, and Namrata Sharma. 2000. Research on risk and vulnerability of rural women in Nepal. Nepal: Centre for Micro-Finance in Nepal (CMF).
Electronic version: http://www.ids.ac.uk/cgap/html/misp.pdf

Abstract: Looks at the primary risks faced by rural women, establish how these women are currently coping with risks, and to ascertain products that might prove most useful to them. Nepal maintains a rich mix of micro-finance institutions. Among the different models, the community based savings and credit organization (SCO) has proven to be extremely effective in serving women clients. The authors interview members of two leading women run SCOs; one from the terai (plain) and one from the hill region of Nepal. These two regions represent the primary geographical areas of Nepal and give good indications of the economic conditions and income generating activities with which women are involved.
Abstract by: Eldis

Sinha, S, and Imran Matin. 1998. Informal credit transactions of micro-credit borrowers in rural Bangladesh. IDS Bulletin, 29

Abstract: Based on detailed study of informal credit transactions in a village in Northern Bangladesh. Empirical research establishes that: a) even with increased outreach, MFI credit is unable to substitute for the informal sector; b) informal lenders are preferred for their local and timely access, speedy disbursement and flexible repayment; c) MFI-member households borrow as much from informal sources as non- members of comparable groups; d) target-group households resort to extensive cross-financing of their loans, using both informal loans and MFI loans for their current consumption needs and debt-servicing; e) initiation of a virtuous cycle depends on the household’s human and physical resources, the MFI lending technology, economic opportunities within and around the village and the macro-economic policy environment.
Abstract by: Microfinance Gateway

Skees, Jerry. 1999. Agricultural Insurance in a Transition Economy. Agricultural Finance and Credit Infrastructure in Transition Economies: Proceedings of OECD Expert Meeting, Moscow, Feb. 1999., 233-49. Moscow: O.E.C.D.

Abstract: Availability and cost of credit are influenced by risk. Well-functioning risk sharing markets can improve availability of credit and reduce cost. One source of risk is from adverse weather that can greatly reduce crop yields. Thus, it is desirable to have effective multiple peril yield crop insurance. However, nearly all attempts by governments around the world to support crop insurance have failed, primarily due to several unique problems that accompany offering multiple peril crop insurance. This paper reviews those problems and offers an alternative that is largely free of the problems. The alternative holds promise for improving the availability of risk sharing markets.
Abstract by: Author

Tabor, S. R., W. Janssen, and H. Bruneau. 1998. Financing Agricultural Research: A Sourcebook.International Service for National Agricultural Research (ISNAR).
Electronic version: http://www.isnar.cgiar.org/publications/books/FSB.htm

Abstract: Compiles experience, analysis, and advice for addressing the funding problems of agricultural research systems in the developing countries. It addresses a range of issues in financial policy, planning, and management. The list of topics covered is not exhaustive, and the lessons drawn from experience in one setting may or may not prove of value in another. However, urgent efforts are needed to resolve the financial crisis of the developing world’s national agricultural research systems. This book is intended as a guide to the policy makers and research leaders involved in this process.
Abstract by: Eldis

Temu, A. E., M. Mwachang'a, and K. Kilima. 2001. Agriculture Development Intervention and Smallholder Farmers Credit in Southern Tanzania: An Assessment of Beneficiaries. Savings and Development African Review of Money, Finance and Banking, no. Supplement: 119-41.

Abstract: Despite many failures of agricultural credit schemes in Low Income Countries, small farmers finance remains an important component of agricultural development projects. The failures of the supply led credit, and the need to ensure institutional efficiency and sustainability of the credit programmes call for continued studies to evaluate credit delivery initiatives by development projects. This paper focuses on the credit issued by the Southern Highlands Extension and Rural Finance Project to small farmers in Tanzania. Analyses anchor on regression and discriminant models using field survey data from 71 borrowers and 49 non-borrowers. Together with some institutional design faults, the study has identified important socioeconomic variables that influence farmers' demand and eligibility for credit. The general conclusion from the study is that there has been an overemphasis on institutional weaknesses due to the ignorance of limitations on the demand side. The recipients' lack of business orientation, acumen and entrepreneurial drive has a big hand in the ineffectiveness of credit projects. The paper recommends that, credit projects should place great importance on identifying viable borrowers based on their commercial orientation and business acumen. The projects should include training (on business and debt management) components in their programmes.
Abstract by: CABI

Thillairajah, Sabapathy. 1994. Development of Rural Financial Markets in Sub-Saharan Africa. World Bank Discussion Papers 219 ed. Washington, DC: World Bank.

Abstract: The report is a regional overview drawn from several country case studies intended to stimulate further research and discussion in the countries of sub-Saharan Africa (SSA), the donor community and the World Bank itself. The study draws on the experience and lessons from several countries (mainly Benin, Ghana, Kenya, Madagascar, Malawi, Niger, Nigeria and Tanzania), but does not attempt to summarize all the findings in the country studies. The report attempts to synthesize the promising elements in rural finance operations reviewed in countries within and outside SSA, with the focus on savings mobilization, improving loan portfolio management, reducing transaction costs, etc. The experiences reviewed point to the relatively successful performance of the informal sector, particularly financial cooperatives, group finance and trade finance, and the promise it holds through possible greater integration with the formal financial system for the development of viable rural financial markets in SSA. Chapter 1 explains the emphasis placed on rural financial markets development, on financial intermediation, on the financial viability of lending institutions and sustainability of the financial systems, including the informal systems, serving rural households and enterprises. A summary description of the financial systems and rural financial services with special reference to SSA countries is provided in chapters 2 and 3. The importance of interest rates, transaction costs, and risk management is discussed in chapter 4. The role of governments and aid agencies is the theme of chapter 5. Lessons of experience, drawn from the country cases and special reviews as well as the most promising initiatives are summarized in chapter 6. The key issues identified in the course of study are recapped in chapter 7, and findings and recommendations are summarized in chapter 8.
Abstract by: CABI

Tillack, Peter, and Eberhard Schulze. 2000. Land Ownership, Land markets and their influence on the efficiency of agricultural production in Central and Eastern Europe. Kiel: Wissenschaftsverlag Vauk Kiel KG.

Tillette de Mautort, A. 1999. Mozambique: Options to Support Grain Marketing Credit.Food security in Malawi and Mozambique.
Electronic version: http://www.eldis.org

Abstract: As part of its Food Security Programme in Mozambique the European Commission (EC) has programmed a marketing credit facility which is intended to facilitate the marketing of agricultural produce. This paper explores two financial options: a)? a credit line to enable traders to purchase additional quantities of produce; b)?a guarantee facility accessible to lending institutions in the event of traders defaulting on marketing loans. The paper identifies the target group and risks faced by lending institutions before examining in detail the practicalities of the financial options. The paper includes a case study developed to demonstrate the impact of factors like interest rate and loan defaulting on the sustainability of the credit line in the absence of subsidies. It also assesses the number of beneficiaries that could benefit from it. This is compared with a similar (although not as detailed) model of a guarantee scheme.
The paper concludes that under the present circumstances a comparison between a marketing credit line and a credit guarantee fund comes down in favour of the credit line for the following main reasons: a) a marketing credit line could be put in place more quickly than a guarantee scheme; b) the functioning of a credit line is more easily understood institutionally and by borrowers; c) lending institutions are likely to be more diligent in making and recovering loans under a credit line; d) a guarantee scheme adds yet another set of procedures to be completed before a loan can be approved, resulting in delays.
Abstract by: Eldis, CSF

Turtiainen, Turto. 1999. Rehabilitation of Rural Finance Institutions: The Case of Benin Savings and Credit Cooperatives and Lessons from Other Cases. Africa Region Findings 131 ed. Washington, DC: World Bank.
Electronic version: http://www.worldbank.org/afr/findings/english/find131.htm

Abstract: Most attempts to develop financial markets and rural credit institutions in Africa have performed poorly, not satisfying the demand for savings and credit services in the rural areas. In many cases, however, the institutions continue to exist and could be revived, enlarged, or made more efficient if suitable programs to help them can be worked out. This note reviews the strategies and measures that can be used to rehabilitate rural finance institutions, based on the successful rehabilitation program in Benin and some other cases in Africa. Rehabilitation of a rundown rural finance institution takes several years, but it can be organized in phases, first concentrating on emergency measures to save the institution from bankruptcy, and then planning and implementing the actions for a longer term recovery process.
Abstract by: Author

United States Agency for International Development. 1991. Mobilizing Savings and Rural Finance: The AID Experience. Washington, DC: U.S. Agency for International Development.

Abstract: This book considers the innovations in rural finance that have accrued from years of research and experimenting within the Agency for International Development (A.I.D.), in relation to small farm credit. The chapters trace A.I.D.'s experience in the area of agricultural credit and the agency's endeavours to explore problems and solutions. To illustrate how A.I.D. innovations can be used to address country-specific financial problems, the book has four chapters which focus on A.I.D.'s Experimental Approaches to Rural Savings (EARS) projects. These chapters are case studies that explore the lessons learned from EARS projects in Honduras, the Dominican Republic, Bangladesh and Niger. The final chapter suggests guidelines for addressing rural financial issues with two specific project objectives in mind: strengthening rural financial markets and targeting credit to agriculture. Issues which need to be addressed include: the conduciveness of the macroeconomic environment to the setting up of financial markets; the basis for a rural financial market; the utilization of existing financial institutions; whether the target population needs credit; effective targeting; and ensuring the viability of rural financial institutions.
Abstract by: CABI

———. 2000. USAID microenterprise development briefs : a compilation of briefs issued from February 1995 through October 1998. Washington, DC: USAID.
Electronic version: http://www.dec.org/

Van Empel, G. J. J. M., and J. Sluijs. 2001. IFC Rural Finance Study: Analysis of strategies, approaches, best practices and workable solutions of the multilateral and bilateral donors.Rabo International Advisory Services BV.

Abstract: This study made an inventory and analysis of the strategies, approaches, best practices and workable solutions of the multilateral and bilateral donors. The projects examined were targeted to the private sector and had to show sustainability and have good outreach. Analysis of the different projects came from personal interviews of different staff within the donors' organizations, previous work completed in the field of rural finance and different strategy papers.
Abstract by: CSF

Van Greuning, Hennie, Joselito Gallardo, and Bikki Randhawa. 1999. A Framework for Regulating Microfinance Institutions.Financial Sector Development Department-World Bank.
Electronic version: http://www.worldbank.org/html/dec/Publications/Workpapers/
wps2000series/wps2061/wps2061.pdf

Abstract: Is there a need to regulate microfinance institutions? If so, what activities should be regulated? Who should regulate them? And what issues are fundamental to the sector's regulation? The continuum of institutions providing microfinance cannot develop fully without a regulatory environment conducive to their growth. Without such an environment, fragmentation and segmentation will continue to inhibit the institutional transformation of microfinance institutions. Van Greuning, Gallardo, and Randhawa recommend a tiered approach to external regulation, one that takes into account the different types of microfinance institutions, the products they offer, and the markets they service. A tiered approach can be useful in designing regulatory standards that recognize the basic differences in structure of capital, funding, and risks faced by different kinds of microfinance institutions. The model they develop for a regulatory framework identifies thresholds of financial intermediation activities, thresholds that trigger the requirement that an institution satisfy external or mandatory regulatory guidelines. It focuses on risk-taking activities that must be managed and regulated.
They illustrate the usefulness of the model by practically applying prudential considerations to various categories and values of financial risk for each of three broad categories of microfinance institution.
A transparent, inclusive framework for regulation will preserve the market specialties of different types of microfinance institutions-and will promote their ultimate integration into the formal financial system. One example of the kind of regulation the authors recommend: Require standard registration documents and procedures-no different from those required of regular corporations-including the designation of a central government agency with which they should register as corporate entities.
Abstract by: Eldis

Von Pischke, J. D. 1991. Finance at the Frontier: Debt capacity and the role of credit in the private economy. Washington, D.C.: The International Bank for Reconstruction and Development//The World Bank.
Electronic version: http://www.worldbank.org/wbi/pubsbysubject
_bankingfinanceandinvestment.html

Abstract: This book discusses how to make good loans to individuals and firms at the "frontier." This frontier is not geographic, but market-based. The book also indicates how lending at the frontier can be remunerative to commercial banks, development banks, and other development finance agencies that retail credit and assume credit risk.
Abstract by: World Bank

Walraven, Nicholas A. 1999. Lending by Rural Banks Involved in Mergers. Journal of Agricultural and Applied Economics 31, no. 2: 201-14.

Abstract: This paper employs a variety of sources of data and a number of methods to describe rural lending markets in the USA. Over the sample period, 1992-98, there was a pronounced trend towards affiliation of banks, both urban and rural, with holding companies, although over this period there was little change in the concentration of banking offices in rural areas. Using data from the 1993 National Survey of Small Business Finances, the study found some evidence that rural small businesses were less likely to apply for a loan than urban small firms, although those rural firms that did apply were more likely to have their application accepted.
Abstract by: Author

Wenner, Mark D., and Rodolfo Quiros. 2000. Agricultural Credit Card Innovation: The Case of Financiera Trisan. Best Practices Series ed. Washington, DC: Inter-American Development Bank.

Abstract: Credit cards are ubiquitous in the industrialized countries and becoming more commonly used by the urban middle and upper classes of developing countries. In the rural areas of developing countries, however, they are less common due to the greater seasonality in income flows and the higher rates of poverty. Financiera Trisan, a finance company in Costa Rice, has introduced a rural credit card, targeting agricultural input suppliers and farmers. The promise of this product is that it can dramatically reduce transaction costs for clients and merchants accepting the card. This paper analyzes the experience of Financiera Trisan in developing and expanding its credit card program. The principal findings are that the credit card is a viable and profitable product; and that infrastructural and legal obstacles present in the country require creative solutions.
Abstract by: Author

Whiteside, Martin. 1997. Botswana: encouraging sustainable family sector agriculture.CORDE, Environment and Development Consultancy Ltd for DFID .
Electronic version: http://www.eldis.org/fulltext/botswana.pdf

Abstract: Paper concentrates on services and policies needed to support sustainable family sector agriculture in the east of Botswana where the majority of the population and the largest number of resource poor people are concentrated. It does not attempt to look in detail at the needs of the 'Remote Area Dwellers’ although they experience extreme poverty, as this is a specific subject area. Nor does it look at some of the higher potential areas such as Pandamatenga, which, although potentially important in production terms, involve a relatively small number of households. This report is structured around the three interlocking conditions considered necessary for sustainable agriculture
Abstract by: Eldis

Yaron, Jacob, and McDonald Benjamin. 1997. Formal-informal sector interaction in rural credit markets. Finance and Development 34, no. 4: 40-43.

Abstract: The paper argues that many developing countries have tried to spur income growth and reduce poverty in rural areas by making low-interest loans to farmers. The results, it suggests, have been disappointing. A broader approach emphasizing policy and legal reforms and savings mobilization has been more successful. Issues discussed are: challenges for rural finance (the macroeconomic environment, sectoral policies, financial market rigidities, legal and regulatory barriers); the traditional approach; a new approach; a new environment; government interventions (when to intervene? how to intervene? targeting, designing successful rural financial intermediaries); assessing performance; and a successful case study of Bank Rakyat Indonesia's Unit Desa, which has focused on innovative operating policies and autonomy, low cost delivery, a high-quality portfolio, substantial spreads, and self-sufficiency.
Abstract by: CABI

Yaron, Jacob, McDonald Benjamin, and Gerda L. Piprek. 1997. Best Practices: Three Success Stories. Rural Finance Issues, Design and Best Practices., 117-37. Washington, D.C.: IBRD- World Bank.

Abstract: This chapter examines the management practices and modes of operation underlying the success of three rural financial institutions (RFI). The Bank for Agriculture and Agricultural Cooperatives (BAAC), Thailand, the Village Banks (Unit Desas BRI-UD) of Bank Rakyat Indonesia(BRI), and the Grameen Bank (GB) in Bangladesh, have all proven successful in achieving their core objectives of outreach and self-sustainability. Even though each of the three institutions differs in many ways, all have consistently practiced the same basic principles. And although BAAC, the BRI-UD, and the GB are not the only successful RFIs, there is substantial information accessible about their particular successes. Also, all three of these institutions are important to both the rural and national financial sectors. In examining the external factors that contributed to the success of these three RFIs, association may be brought to the complimentary macroeconomics conditions for which they functioned, still they each faced their own limitations and constraints in the implementation of new policies and operating methods. And although the guiding principles of these institutions should be explored, careful measures must be taken in adapting these operations and consideration must be kept in regards to the context of each RFI’s individual objective and clientele. A solution that is successful in one environment may not adapt well in another.
Abstract by: UES, CSF

Yaron, Jacob, McDonald Benjamin, and Gerda L. Piprek. 1997. Building Institutional Capacity. Rural Finance Issues, Design and Best Practices.Washington, D.C.: IBRD- World Bank.

Abstract: Few rural financial institutions (RFIs) have been successful in both outreach and self-sustainability. Inadequate credit evaluation, poor enforcement and loan collection, expensive administrative procedures, and a lack of financial discipline by both clientele and institutions, are contributing factors to many failed state and donor-sponsored RFIs. Most state-owned RFIs emphasize quantity of disbursements, low interest rates, and agricultural production, as opposed to quality of lending, broad access to credit, and diversified, market-oriented rural economies. This has resulted in poor financial performance of RFIs, forcing dependency on subsidies that exhausted government budgets and deprived other sectors of funds. Although there is no specific formula for creating successful RFIs, factors such as target clientele and current socioeconomic conditions will help establish an appropriate operational approach. This chapter discusses the primary elements of institutional capacity and provides principles for institutional development in formal and semiformal RFIs.
Abstract by: UES, CSF

———. 1997. Performance Criteria for Rural Financial Intermediation. Rural Finance Issues, Design and Best Practices., 87-98. Washington, D.C.: IBRD- World Bank.

Abstract: Government-supported interventions in rural financial markets are often geared to impact development by expanding incomes and reducing poverty. Because it is necessary to ensure that goals will be achieved, interventions often involve the use of scarce public funds, without consideration of the costs to society. With the problems associated with the methodology with impact assessments, the proxies for development impact best evaluate the success of rural financial institutions. The success of the RFI can be evaluated by the extent of the outreach and self-sustainability. This paper examines the methodological problems associated with measuring the impact of rural credit projects, and the second part develops a framework to assess rural financial institutions.
Abstract by: UES, CSF

———. 1997. Rural Finance: Issues, Design and Best Practices. Washington DC: IBRD.

Abstract: Traditional and new approaches that governments have taken to rural finance are outlined. The report outlines the traditional approach to rural finance, which relied heavily on supply-led, state-owned agricultural credit institutions. Second, it highlights how wide-spread urban-biased policies impeded rural development and the promotion of rural financial markets. These policies included over-valued exchange rates, inflexible price controls on food produce, under-investment in rural infrastructure, and protection of domestic industries against import competition. The volume then illustrates the emerging new approach, which focuses on creating an environment to promote viable rural financial markets. Specifically, it focuses on creating a favourable policy environment in terms of the macroeconomy, agricultural and financial sectors, rural development, and the legal and regulatory framework. Moving from the macroeconomic and sectoral to the institutional level, the report offers two primary criteria, outreach and sustainability, as the bases for assessing the performance of rural financial institutions. It reviews and analyses the modes of operation and performance of three successful rural financial institutions: the Grameen Bank of Bangladesh, the Bank of Agriculture and Agricultural Cooperatives (BAAC) in Thailand, and the Bank Rakyat of Indonesia, Unit Desa (BRI-UD). The analysis illustrates the phenomenal growth and development that these institutions underwent over the past decade.
Abstract by: CABI

Yotopoulos, Pan A., and Sagrario L. Floro. 1991. Transaction Costs and Quantity Rationing in the Informal Credit markets: Philippine Agriculture. Markets in Developing Countries: Parallel, Fragmented, and Black. Michael Roemer, and Christine Jones, 141-66. California: ICS Press.

Abstract: The study of credit markets has rightfully become an integral part of the study of economic development. Financial intermediation helps alleviate one of the two structural gaps in the development process, the disparity between savings endowments and investment opportunities, as well as helping meet consumption needs. The main focus of the literature on development finance has until recently been formal financial intermediation. This chapter examines the various mechanisms adopted by informal financial intermediaries to cope with structural distortions in a fragments market environment, with the informal credit market in Philippine agriculture as a case in point. Undoubtedly, both government assistance and government regulation are required to improve the performance of financial markets, especially in developing countries. But any rehabilitation policy package, whether it involves the formal institutions alone or includes the informal sector as well, must take into account the crucial impact that the general economic environment and the specific institutional infrastructure has on financial markets. For any proposed solution to have permanent effects, is must address the lenders’ problems, including the lack of market information and of infrastructural support services that reduces transaction costs, and the problems faced by borrows that involve their economic viability and translate directly into their creditworthiness.
Abstract by: CSF

Zaman, Hassan. 1999. Assessing the poverty and vulnerability impact of micro-credit in Bangladesh: a case study of BRAC. Washington, D.C: Office of the Chief Economist and senior Vice President (DECVP) World Bank.
Electronic version: http://www.worldbank.org/html/dec/Publications/Workpapers/
wps2000series/wps2145/wps2145.pdf

Abstract: Presents the main argument that micro-credit contributes to mitigating a number of factors that contribute to vulnerability, whereas the impact on income-poverty is a function of borrowing beyond a certain loan threshold and to a certain extent contingent on how poor the household is to start with.
Abstract by: Microfinance Gateway

Zeller, Manfred. 1995. The Demand for Financial Services by Rural Households-Conceptual Framework and Empirical Findings. Quarterly Journal of International Agriculture 34, no. 2: 149-70.

Abstract: The paper aims to conceptualize the relationship between food security of the rural poor and access, or lack thereof, to financial services. The conceptual framework shows that households based on the food security motive demand not only production credit, but also credit for consumption, savings, services and insurance. Using household data from a survey in Madagascar in 1992, a regression analysis is used to assess the effects of informal and formal credit on household income and consumption. While most of the formal loans are used for production, informal loans are frequently used for stabilization of consumption of food and other basic needs. The analysis shows significant positive effects of formal and informal loans on household income. Furthermore, informal loans significantly increase food consumption. It is concluded from this analysis that a broader array of rural financial services in developing countries could contribute to household food security.
Abstract by: CABI

Zeller, Manfred, and Manohar Sharma. 1998. Rural Finance and Poverty Alleviation. Food Policy Report ed. Washington, DC: International Food Policy Research Institute.
Electronic version: http://www.ifpri.cgiar.org/pubs/fpr/fpr25.pdf

Abstract: Presents information on the credit constraints that poor rural households face, derived from detailed rural household surveys conducted by IFPRI and its collaborators in nine countries of Asia and Africa (Bangladesh, Cameroon, China, Egypt, Ghana, Madagascar, Malawi, Nepal, and Pakistan). It uses this information to make the case for appropriate public intervention in strengthening rural financial markets and draws conclusions about areas where public resources may best be spent. It describes how informal, often indigenous institutional arrangements from savings clubs and lending networks to small retail shops and input dealers have succeeded in tailoring savings, credit, and insurance services to the poor. What enables informal institutions to provide sustainable financial services that banks and cooperatives in the formal sector institutions, with few exceptions, fail to provide? What are their strengths and weaknesses? What lessons can formal sector institutions draw from them? The report argues that the basic problem lies in institutional arrangements, summarily transplanted from urban-based formal banking systems that have high transaction costs for lenders and borrowers alike. For the lender, these costs are incurred in screening large numbers of borrowers, monitoring and enforcing unsecured loan contracts, and managing tiny savings deposits. For the borrower, these costs take the form of time and other resources spent securing loans or making deposits, or in appropriate deposit or loan terms. Finally, the report looks at examples of recent institutional innovations that overcome some of these obstacles. It concludes that just as there is a role for the public sector to develop or support science based technologies, concerted public action is also needed to create an enabling environment in which institutional innovation is encouraged and given more room to spread. Governments, donors, banking practitioners, non governmental organizations, and research institutions must work together closely to pinpoint the costs, benefits, and future potential of emerging rural financial institutions.
Abstract by: Author

Zhang, Xiaobo, and Shenggen Fan. 2001. How Productive is Infrastructure? New Approach and Evidence from Rural India. EPTD Discussion Paper 84 ed. Washington, DC: IFPRI.

Abstract: There have been competing arguments about the effect of public infrastructure on productivity in the literature. This paper examines the relationship between technology and infrastructure using panel data from rural India from 1971 to 1994. A causality test is conducted to check the data for length of lagged relationships and the existence of reverse causality and then regressed using a dynamic system GMM estimator in the autoregression equations. A second method of estimation that controls for possible endogeneity from reverse causation is also proposed for estimating the relationship between the capital stock and the productivity in level form. It is found that infrastructure development and productivity often affect each other in the long term but not in the short run.
Abstract by: CSF