|Title||Leading Issues in Rural Finance|
|Content Language||English (en)|
|Date Of Publication||2002|
|Description||Rural and agricultural finance has re-emerged as a development topic of great interest for many funding agencies and policy makers. Unfortunately, recent proposals for changing policy and creating new agricultural development banks suggest that the supporters have forgotten the key lessons learned from the dismal performance of most agricultural credit programs implemented in the 1960s to 1980s under the directed credit paradigm. This book once again reminds us of those lessons. Professor Sanderatne is a recognized rural finance authority in Asia with both academic and policy experience, and this book reflects a lifetime of research and analysis of the key issues. |
The book contains 13 chapters. Three chapters in the first section cover the functions, features, and evolution of rural financial markets. In two chapters in section two, the author straightforwardly tackles the contentious issues concerning the role of informal finance with empirical data presented for Sri Lanka. Section three discusses rural savings mobilization. Section four on institutional finance covers important topics related to institutional lending in rural areas. Five chapters deal with the evolution of institutional credit in Sri Lanka, the problem of loan recovery, interest rate policies, an analysis of the factors that explain small farmer loan defaults, and political economy issues that contribute to defaults. Taken together, these chapters provide abundant evidence of how the old paradigm of subsidized farm credit failed to develop sustainable rural finance in the country despite successive programs, policies, institutions and guarantees. The last chapter ends on a more positive note by reviewing key aspects of outreach and sustainability of microfinance and identifies strengths and limitations of the new financial system paradigm.
Readers of this book will be reminded about how this prominent figure in the field helped compile the evidence and arguments, pointing to the failures of the directed credit paradigm in Asia. His work contributed to the base of understanding used to design the more promising approaches used today in successful microfinance programs. This material needs to be read by everyone who suggests quick and easy solutions to the challenges of rural finance.
This review was written by Dick Meyer, Professor Emeritus and Senior Research Specialist, Ohio State University, and published in the ADB Microfinance newsletter.
|Publisher||University of Peradeniya|
|Keywords|| RURAL FINANCE, RURAL FINANCIAL MARKETS|