Microfinance in Rural Argentina

The recent success of microfinance for the urban self-employed contrasts with decades of failure of public development banks for small farmers. In this article, the author describes the ways in which rural microfinance organizations have tried to adapt the lessons of urban microfinance to manage the risks and to control the costs of the supply of financial services in rural areas. The author then asks whether the lessons of urban microfinance are likely to apply in the poorest rural areas of Argentina. The author concludes that microfinance is unlikely to improve access to small loans and small deposits for many of the rural poor in Argentina; distances are too great, farmers too specialized, and wages too high. Improved access will likely come not from loans targeted by government decree but from strengthened institutions that support financial markets.

[Author's abstract]