Evaluating the Viability of Agricultural Development Banks: A Methodology

Abstract

Concern with the performance of public agricultural development banks has prompted efforts to evaluate their viability and to ascertain the determinants of their viability. This paper prepared a methodology (list of issues) for a study of development banks, sponsored by the lnteramerican Development Bank, in an effort to promote the viability of the intermediaries with which the IDB operates. Determinants of viability include the environment (infrastructure, technology, prices, legal and political system), macroeconomic management (inflation, exchange rate), bank prudential supervision, regulation, and policies (interest rates, reserve requirements, rediscounting, and credit allocation), institutional organization and procedures, as well as financial technologies. Caution is recommended in the use of farm models and budgets in order to establish customer viability.