On the Viability of Agricultural Development Banks: Conceptual Framework
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Date
1990-04
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Ohio State University. Department of Agricultural, Environmental, and Development Economics
Abstract
The main problem of public agricultural development banks is their lack of viability, mostly reflected by the decline in the real value of their loanable funds, as a consequence of inflation, poor loan collection, and operational losses. As a result, these banks have lost support from their clientele, international donors, and governments. The conceptual framework for traditional agricultural credit programs is contrasted with the new Ohio State University view on rural financial markets. Viability requires reaching larger numbers of customers with a wider range of financial services, including deposit facilities; increasing the volume of purchasing power transferred from surplus to deficit units through market oriented intermediation; improving the quality of the services provided and guaranteeing permanent access to the services of these institutions; and lowering transaction costs for all market participants. Viability requires environment and policy changes, institutional strengthening, and technological innovation.