Rural Finance and Microfinance Development in Transition Countries in Southeast and East Asia
This paper provides an overview of rural finance and microfinance development in transition countries in Southeast and East Asia – Cambodia, Lao PDR, Myanmar, Vietnam, and Mongolia. It focuses on the institutional evolution and the inter-relation between policies and institutions.
The paper finds diverse potentials that formal and semi-formal financial institutions – agricultural banks/rural development banks, microfinance banks, microfinance NGOs, financial cooperatives, and other indigenous financial systems – have to reach out to the rural poor of respective nations. It emphasizes that any monolithic view that expects a single type of MFIs to dominate the rural financial markets is to be denied. To develop effective rural financial systems, some policy implications are drawn, such as:
- Reforms of agricultural banks;
- Financial sector vision and adoption of market-based policy framework for rural and microfinance;
- Development of retail capacities of MFIs;
- Progressive establishment of legal and regulatory framework for microfinance;
- Improvement in governance of indigenous financial systems;
- Savings mobilization and financial sustainability.
