Paper
Sustainable Rural Finance: Policy and Design Issues
Examining the necessary macroeconomic underpinnings of sustainable rural finance
8 pages
The paper states that a stable macroeconomic environment characterized by low inflation expectations is a necessary condition for growth of the financial markets as it encourages the expansion of formal financial institutions into the countryside, thereby providing stronger competitive pressure vis-à-vis informal lenders.
Furthermore, it is necessary to remove barriers to entry to the financial markets in order to enhance competition in the financial marketplace. In the light of these, the paper discusses Philippine's current policy framework for rural finance. It presents:
- Some trends in access to rural credit;
- Current rural finance policy framework;
- Critique of past rural credit policies;
- Analyses policy and design issues for sustainable rural finance.
Paper concludes that for a number of reasons Philippine's agriculture has failed to sustain its growth and has remained a stagnant sector.
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