The Emergence of a Microfinance Market in the Sertão Back Lands of Bahia

This paper analyzes the organizational and cultural basis on which financial markets in poor regions are built, and focuses on Bahia.

The action of Christian Base Communities has been important in promoting a cultural change process. It has also helped in the formation of a dense network of organizations that has expanded access of farmers to financial markets and new channels of commercialization. The paper finds that:

• Long drawn out cultural change process created conditions for the emergence of new social structures and formation of a microfinance market;
• Farmers began to develop the ability to manage their resources better through initiatives involving capacity building and technical assistance;
• Family decisions concerning financial management began to be guided by market parameters;
• Setting up of credit unions caused a rupture between the local financial market and the traditional institutional environment based on personal bonds and clientelism.

The paper concludes that policies intended to foster the development of poor regions and populations must take into account the resources available to the populations and the institutional conditions that must be developed in order to gain access to the markets.