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Rural credit in developing countries

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  • Braverman, Avishay
  • Guasch, J. Luis
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    Abstract

    Subsidized formal credit to the agricultural sector has been advocated as more efficient, equitable, and easier to implement than, say, land reform. But the record on subsidized credit to farmers is dismal. It shows a significant failure either to achieve an increase of agricultural output cost-effectively or to improve rural income distribution and alleviate poverty. Many of the financial institutions have proven to be inept and to lack accountability. Common features of the success stories are tougher stands on default; strict auditing and accounting procedures and financial control; and some form of joint responsibility or liability by small groups of farmers, whereby default by one member cancels future loans to the whole group.

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    Bibliographic Info

    Paper provided by The World Bank in its series Policy Research Working Paper Series with number 219.

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    Date of creation: 30 Jun 1989
    Date of revision:
    Handle: RePEc:wbk:wbrwps:219

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    Related research

    Keywords: Banks&Banking Reform; Environmental Economics&Policies; Economic Theory&Research; Financial Intermediation; Insurance&Risk Mitigation;

    References

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    1. Braverman, Avishay & Stiglitz, Joseph E., 1986. "Landlords, tenants and technological innovations," Journal of Development Economics, Elsevier, vol. 23(2), pages 313-332, October.
    2. Bhattacharya, Sudipto & Guasch, J Luis, 1988. "Heterogeneity, Tournaments, and Hierarchies," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 867-81, August.
    3. Braverman, Avishay & Hammer, Jeffrey S & Gron, Anne, 1987. "Multimarket Analysis of Agricultural Price Policies in an Operational Context: The Case of Cyprus," World Bank Economic Review, World Bank Group, vol. 1(2), pages 337-56, January.
    4. Feder, Gershon, 1985. "The relation between farm size and farm productivity : The role of family labor, supervision and credit constraints," Journal of Development Economics, Elsevier, vol. 18(2-3), pages 297-313, August.
    5. Lazear, Edward P & Rosen, Sherwin, 1981. "Rank-Order Tournaments as Optimum Labor Contracts," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 841-64, October.
    6. Allen, Franklin, 1983. "Credit Rationing and Payment Incentives," Review of Economic Studies, Wiley Blackwell, vol. 50(4), pages 639-46, October.
    7. Braverman, Avishay & Srinivasan, T. N., 1981. "Credit and sharecropping in agrarian societies," Journal of Development Economics, Elsevier, vol. 9(3), pages 289-312, December.
    8. Bhaduri, Amit, 1977. "On the Formation of Usurious Interest Rates in Backward Agriculture," Cambridge Journal of Economics, Oxford University Press, vol. 1(4), pages 341-52, December.
    9. Raaj Kumar Sah & Joseph E. Stiglitz, 1984. "The Economics of Price Scissors," NBER Working Papers 1156, National Bureau of Economic Research, Inc.
    10. Braverman, Avishay & Guasch, J. Luis, 1984. "Capital requirements, screening and interlinked sharecropping and credit contracts," Journal of Development Economics, Elsevier, vol. 14(3), pages 359-374, April.
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    Cited by:
    1. Deepak Lal, 1994. "Labor Market Insurance and Social Safety Nets in Developing Countries," UCLA Economics Working Papers 716, UCLA Department of Economics.
    2. Binswanger, Hans & Khandker, Shahidur, 1992. "The impact of formal finance on the rural economy of India," Policy Research Working Paper Series 949, The World Bank.
    3. Pei Guo & Xiangping Jia, 2008. "The Structure and Reform of Rural Finance in China," Working Papers 0802, China Agricultural University, College of Economics and Management.
    4. Casillas, Gabriel & Mitchell, Paul D., 2003. "Rural Credit Rationing And National Development Banks In Developing Countries," 2003 Annual meeting, July 27-30, Montreal, Canada 22199, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Deepak Lal, 1991. "Social Policy After Socialism," UCLA Economics Working Papers 641, UCLA Department of Economics.

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