| Abstract: | Providing affordable credit to the rural population has longbeen a prime component of development strategy. Governmentsand donors have sponsored and supported supply-led rural financeinstitutions both to improve growth and equity and to neutralizeor mitigate urban-biased macroeconomic policies. But becauseof high risks, heavy transaction costs, and mounting loan losses,many of the programs have drained state resources to littlepurpose, reaching only a small part of the rural populationand making little progress toward self-sustainability. There are, however, a few success stories. This article reviewsthe policies, modes of operation, incentives, and financialperformance of four publicly sponsored programs in Asia thatare widely perceived to be successful, to find out what economic,social, and institutional factors contributed to their success. |
