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Institutional aspects of credit cooperatives

Author

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  • Braverman, Avishay
  • Guasch, J. Luis

Abstract

The most common form of government intervention in the rural sector has been massive lending at subsidized interest rates. Credit programs generally aim to reach small farmers. However, despite the expansion of credit over the last three decades, few farmers in low income countries seem to have received or benefited from such credit. It has thus been common for small-scale farmers to resort to the formation of organized credit groups or cooperatives. This paper is a normative analysis of cooperatives viewed as institutions to improve the plight of small-scale farmers. The purpose is to analyze which structures are most successful, then to promote credit cooperatives and to design an optimal incentive scheme in place of subsidized credit policies of the past. The paper concludes by stating that a policy of providing assistance to existing and potential credit groups on how to set incentives, implement monitoring schemes and develop centralized resources is more desirable and more cost effective than the old fashioned and largely regressive subsidized credit policies.

Suggested Citation

  • Braverman, Avishay & Guasch, J. Luis, 1988. "Institutional aspects of credit cooperatives," Policy Research Working Paper Series 7, The World Bank.
  • Handle: RePEc:wbk:wbrwps:7
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    References listed on IDEAS

    as
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    4. Abreu, Dilip & Pearce, David & Stacchetti, Ennio, 1986. "Optimal cartel equilibria with imperfect monitoring," Journal of Economic Theory, Elsevier, vol. 39(1), pages 251-269, June.
    5. Radner, Roy, 1985. "Repeated Principal-Agent Games with Discounting," Econometrica, Econometric Society, vol. 53(5), pages 1173-1198, September.
    6. Braverman, Avishay & Guasch, J. Luis, 1986. "Rural credit markets and institutions in developing countries: Lessons for policy analysis from practice and modern theory," World Development, Elsevier, vol. 14(10-11), pages 1253-1267.
    7. Bhattacharya, Sudipto & Guasch, J Luis, 1988. "Heterogeneity, Tournaments, and Hierarchies," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 867-881, August.
    8. Bhattacharya, Sudipto, 1982. "Aspects of Monetary and Banking Theory and Moral Hazard," Journal of Finance, American Finance Association, vol. 37(2), pages 371-384, May.
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    Cited by:

    1. Kailas Sarap, 1990. "Factors Affecting Small Farmers' Access to Institutional Credit in Rural Orissa, India," Development and Change, International Institute of Social Studies, vol. 21(2), pages 281-307, April.

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