000010747 001__ 10747
000010747 037__ $$a4456
000010747 041__ $$aEnglish
000010747 100__ $$aZeller, M.
000010747 100__ $$aSharma, M.
000010747 245__ $$aRural financial services for poverty alleviation: The role of public policy
000010747 260__ $$c2001
000010747 260__ $$b
            
000010747 490__ $$aBook chapter
000010747 507__ $$aMFOLL
000010747 520__ $$aFor poor rural families in developing countries, access to credit and savings facilities such as banks has the potential to make the difference between grinding poverty and an economically secure life. Well-managed savings facilities permit households to build up funds for future investment or consumption. Credit enables them to tap finances beyond their own resources and take advantage of profitable investment opportunities. Farmers may invest in land or in new agricultural technology that will provide higher incomes, while rural households that do not own land can establish or expand family enterprises. Credit and savings also serve as insurance for the poor. In rural areas of developing countries, short-term loans or past savings are often used to provide basic necessities when household incomes decline temporarily — after a bad harvest or between agricultural seasons for example. But in most developing countries, rural financial services are sadly inadequate. In countries as diverse as Ghana, Malawi and Pakistan, access to credit and savings facilities is severely limited for small farmers, tenants and entrepreneurs, particularly women. In many countries only about half of the loan applicants can borrow an adequate amount at the going interest rate, either from formal institutions such as banks and cooperatives or from the informal sector — friends, relatives, pawnbrokers and moneylenders. Those who want to borrow from the formal sector are usually deterred by the strict collateral requirements and high transaction costs frequently involved in doing business with formal institutions, including time spent in travel and doing paperwork. Many potential borrowers are in such need of credit that they are willing to pay substantially higher interest rates in the informal markets — sometimes as high as 80 percent per year. But the amount of credit available through informal markets is often constrained by bottlenecks in the local supply of funds. Even households with annual incomes well above the poverty line may experience difficulty in purchasing enough food during the preharvest season when previous food stocks have been depleted.
The story on the savings side is similar. Costs involved in making small deposits at faraway banks are high. Moreover, the transaction cost per dollar of deposit rises as the size of the deposit becomes smaller, discouraging farmers and rural entrepreneurs from making a series of tiny deposits, as they prefer to do. Many rural financial institutions choose not to accept deposits; others are legally forbidden to do so to protect depositors from fraud and for other reasons. Because most credit and savings programmes still depend on the urban-based banking system for depositing their clients&rsquo; savings and for channeling and disbursing loans, they usually are not able to reach out to locations far away from branches of state-owned or privately owned banks.<br />
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000010747 653__ $$aagriculture
000010747 653__ $$adevelopment
000010747 653__ $$aeconomy
000010747 653__ $$afood
000010747 653__ $$aGhana
000010747 653__ $$aincome
000010747 653__ $$aland
000010747 653__ $$aPakistan
000010747 653__ $$apolicy
000010747 653__ $$apoverty
000010747 653__ $$awomen
000010747 650__ $$aMountain livelihoods
000010747 650__ $$aPoverty and food security
000010747 650__ $$aMountain people/cultures
000010747 650__ $$aNatural resource management
000010747 650__ $$aFarming systems
000010747 650__ $$aPolicies and governance
000010747 650__ $$aGender and equity
000010747 691__ $$aMountain livelihoods
000010747 691__ $$aPoverty and food security
000010747 691__ $$aMountain people/cultures
000010747 691__ $$aNatural resource management
000010747 691__ $$aFarming systems
000010747 691__ $$aPolicies and governance
000010747 691__ $$aGender and equity
000010747 773__ $$pIn Pinstrup-Andersen, P; Pandya-Lorch, R (ed) (2001) The Unfinished Business: Perspectives on Overcoming Hunger, Poverty and Environmental Degradation. International Food Policy Research Institute (IFPRI), Washinton D.C., USA: http://www.ifpri.org/pubs/books/ufa/ufa_ch30.pdf
000010747 8564_ $$uhttp://lib.icimod.org/record/10747/files/4456.PDF
000010747 980__ $$aARTICLE