Rural credit in developing countries
AbstractSubsidized 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 InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 219.
Date of creation: 30 Jun 1989
Date of revision:
Banks&Banking Reform; Environmental Economics&Policies; Economic Theory&Research; Financial Intermediation; Insurance&Risk Mitigation;
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