 Promoting Efficient Rural Financial IntermediationJacob Yaron, McDonald Benjamin and Stephanie Charitonenko The World Bank Research Observer, 1998, vol. 13, issue 2, 147-70 Abstract: Although governments have traditionally used subsidized credit programs to promote agricultural growth, this approach has generally failed to improve incomes and alleviate poverty in rural areas. It has also led to the mistaken belief that rural credit programs cannot be profitable. A new approach seeks to raise standards of living in rural areas by casting the government in a very different role--one of setting a favorable legal and policy environment for rural financial markets and addressing specific market failures cost effectively through well-designed and self-sustaining interventions. There is evidence that this approach can be highly successful. The Village Bank system of Bank Rakyat Indonesia has shown that financial services can be extended to millions of low-income rural clients without relying on subsidies. Indeed, the program has generated enormous profits/or the bank by using simple, innovative, and largely replicable techniques. Copyright 1998 by Oxford University Press. Date: 1998 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:oup:wbrobs:v:13:y:1998:i:2:p:147-70 Ordering information: This journal article can be ordered from Access Statistics for this article The World Bank Research Observer is currently edited by Peter Lanjouw More articles in The World Bank Research Observer from World Bank Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK. Contact information at EDIRC. |
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