Originally published in 1985, twenty-three chapters are brought together in 4 parts dealing with, respectively, problems in rural finance, interest rate policies, politics and finance, and new directions for rural financial markets. In an introduction it is argued that cheap and abundant credit is often regarded as essential for rural development but that actions taken on the basis of this assumption have given disappointing results. Low-interest policies and the improper use of financial markets are seen as the principal reasons for this. It is recommended that higher and more flexible interest rates are allowed and that little or no attention is given to target loans. Informal lenders are thought to offer valuable services therefore they should not be discouraged. More emphasis should be put on voluntary savings mobilization and access to formal loans by non-farm rural firms. It is concluded that many traditional agricultural credit programmes are counterproductive and that attractive product and input prices together with higher yields would be more powerful in stimulating agricultural development.
Table of Contents
Introduction 1 Part 1 Problems in Rural Finance 1 Effects of Finance on Rural Development, 2 Farm-Household Heterogeneity and Rural Financial Markets: Insights from Thailand, 3 Problems with Specialized Agricultural Lenders, 4 Illusion and Reality in Allocating Agricultural Credit: The Example of Colombia, Part 2 Interest-Rate Policies 5 Overview of the Importance of Interest-Rate Policies, 6 Are the Arguments for Cheap Agricultural Credit 8 Agricultural Lending Costs in Honduras, 9 Loan-Transactions Costs, Credit Rationing, and Market Structure: The Case of Bolivia, 10 Cheap Agricultural Credit: Redistribution in Reverse, 11 The Effect of Subsidized Agricultural Credit on Income Distribution in Costa Rica, 12 Rural Credit and Positive Real Rates of Interest: Brazil's Experience with Rapid Inflation, Part 3 Politics and Finance 13 Overview of Relationships Between Politics and Finance, 14 Political Economy of Subsidizing Agricultural Credit in Developing Countries, 15 Agricultural Credit, Political Economy, and Patronage, 16 Economic Distortions and Financial Reforms, 17 Credit and Price Policies in Philippine Agriculture, Part 4 New Directions for Rural Financial Market s 18 Overview of New Directions for Rural Financial Markets, 19 Informal Saving and Credit Arrangements in Developing Countries: Observations from Sri Lanka 20 Savings Mobilization: The Forgotten Half of Rural Finance, 21 Working Capital and Nonfarm Rural Enterprises, , 22 Improving Donor Intervention in Rural Finance, 23 An Agenda for Reform of Rural Financial Markets in Low-Income Countries
Dale W Adams, Douglas H Graham