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rural financial sector

Sowing the seeds for rural finance: The impact of support services for credit unions in Mexico

Miriam Bruhn's picture

Low and volatile agricultural incomes, poor connectivity, low population density and limited information are just a few reasons that have kept commercial banks away of rural areas in developing countries, where nonbank financial institutions (such as MFIs, cooperatives, or credit unions) have played an important role.

However, these rural institutions tend to be small and often suffer from bad risk management, poor governance, and weak technical and managerial capacity. These constraints are in turn passed on to the borrowers in the form of higher interest rates and credit rationing. The lack of human and organizational capital among lenders is a type of market failure where public interventions may be both effective and market friendly (Besley, 1994).

Notes from the field: Sometimes you’re the windshield, sometimes you’re the bug

Markus Goldstein's picture

So this past week I was in Ghana following up on some of the projects I am working on there with one of my colleagues.   We were designing an agricultural impact evaluation with some of our counterparts, following up on the analysis of the second round of a land tenure impact evaluation and a financial literacy intervention, and exploring the possibility of some work in the rural financial sector.   In no particular order, here are some of the things I learned and some things I am still wondering about: