Undermining Rural Development With Cheap Credit

Originally published in 1985, twenty-three chapters are brought together in 4 parts dealing with, respectively, problems in rural　finance, interest rate policies,　politics　and finance, and new directions for rural financial　markets. In an introduction it is argued that cheap and abundant credit is often regarded as essential for　rural development　but that actions taken on the basis of this assumption have given disappointing results. Low-interest policies and the improper use of financial markets are seen as the principal reasons for this. It is recommended that higher and more flexible interest rates are allowed and that little or no attention is given to target loans. Informal lenders are thought to offer valuable services therefore they should not be discouraged. More emphasis should be put on voluntary savings mobilization and access to formal loans by non-farm rural firms. It is concluded that many traditional　agricultural credit　programmes are counterproductive and that attractive product and input　prices　together with higher　yields　would be more powerful in stimulating　agricultural development.