IDEAS home Printed from
   My bibliography  Save this paper

Rural credit in developing countries


  • Braverman, Avishay
  • Guasch, J. Luis


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

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. 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 841-864, October.
    2. Raaj Kumar Sah & Joseph E. Stiglitz, 1983. "The Economics of Price Scissors," NBER Working Papers 1156, National Bureau of Economic Research, Inc.
    3. 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.
    4. Gershon Feder & Tongroj Onchan, 1987. "Land Ownership Security and Farm Investment in Thailand," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 69(2), pages 311-320.
    5. Braverman, Avishay & Srinivasan, T. N., 1981. "Credit and sharecropping in agrarian societies," Journal of Development Economics, Elsevier, vol. 9(3), pages 289-312, December.
    6. 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 337-356, January.
    7. Braverman, Avishay & Stiglitz, Joseph E., 1986. "Landlords, tenants and technological innovations," Journal of Development Economics, Elsevier, vol. 23(2), pages 313-332, October.
    8. 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.
    9. Franklin Allen, 1983. "Credit Rationing and Payment Incentives," Review of Economic Studies, Oxford University Press, vol. 50(4), pages 639-646.
    10. 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.
    11. Bhaduri, Amit, 1977. "On the Formation of Usurious Interest Rates in Backward Agriculture," Cambridge Journal of Economics, Oxford University Press, vol. 1(4), pages 341-352, December.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    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. 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.
    3. Deepak Lal, 1994. "Labor Market Insurance and Social Safety Nets in Developing Countries," UCLA Economics Working Papers 716, UCLA Department of Economics.
    4. 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.
    5. 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.
    6. Deepak Lal, 1991. "Social Policy After Socialism," UCLA Economics Working Papers 641, UCLA Department of Economics.
    7. 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).
    8. 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.


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:219. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.