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Rural credit in developing countries

Author

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  • Braverman, Avishay
  • Guasch, J. Luis

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.

Suggested Citation

  • Braverman, Avishay & Guasch, J. Luis, 1989. "Rural credit in developing countries," Policy Research Working Paper Series 219, The World Bank.
  • Handle: RePEc:wbk:wbrwps:219
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    References listed on IDEAS

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    Cited by:

    1. Gagan Bihari Sahu & D Rajasekhar, 2017. "'Urban Bias' in the Flow of Funds and Deposit Mobilisation: Evidence from Karnataka, India," Working Papers id:12045, eSocialSciences.
    2. Deepak Lal, 1994. "Labor Market Insurance and Social Safety Nets in Developing Countries," UCLA Economics Working Papers 716, UCLA Department of Economics.
    3. Jens Reinke, 1998. "How to lend like mad and make a profit: A micro-credit paradigm versus the start-up fund in South Africa," Journal of Development Studies, Taylor & Francis Journals, vol. 34(3), pages 44-61.
    4. Otima, Ruth M. A., 1994. "Predicting loan repayment performance: a case of Kenyan farm borrowers," ISU General Staff Papers 1994010108000018175, Iowa State University, Department of Economics.
    5. Hans Binswanger & Shahidur Khandker, 1995. "The impact of formal finance on the rural economy of India," Journal of Development Studies, Taylor & Francis Journals, vol. 32(2), pages 234-262.
    6. 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).
    7. Pei Guo & Xiangping Jia, 2009. "The structure and reform of rural finance in China," China Agricultural Economic Review, Emerald Group Publishing, vol. 1(2), pages 212-226, January.
    8. Deepak Lal, 1991. "Social Policy After Socialism," UCLA Economics Working Papers 641, UCLA Department of Economics.
    9. Gagan Bihari Sahu & D. Rajasekhar, 2005. "‘Urban Bias’ in the Flow of Funds and Deposit Mobilisation:Evidence from Karnataka, India," Working Papers id:276, eSocialSciences.

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