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Biblioteca Evolution and scope of rural and agricultural finance in developing countries: A review

Evolution and scope of rural and agricultural finance in developing countries: A review

Evolution and scope of rural and agricultural finance in developing countries: A review

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Date of publication
Diciembre 2022
Resource Language
ISBN / Resource ID

We conducted a scoping review to explore existing rural finance practices and delivery models in
developing countries. The review aimed to examine past and present practices, explore types of
products/services and delivery models, identify knowledge gaps, and propose a framework for
developing and delivering customized financial services for the rural sector. Despite significant
progress in financial products, services and delivery models in the previous decades, access to
finance in rural areas remains low. This could be associated with supply and demand side constraints, including inadequate design of products and delivery models, geographic dispersion of
households, restricted collateral requirement, higher political meddling, macroeconomic instability, institutional inefficiency, inadequate policies and strategies, limited access of farmers to information and market, and risk-taking behavior. Limited financial literacy, business development skills, weak value chain linkages, and low agricultural sector productivity and profitability are also important constraints. Digital innovations offer new opportunities to address challenges, such as designing context-specific financial products and delivery models and reaching the diverse rural population. To enhance financial inclusion, innovations should consider improving financial institutions' policies and strategies, developing tailored products and services, adopting a client-centered approach, bundling financial and non-financial services, building financial literacy, and utilizing digital innovations.
Success in developing and deploying innovative financial services requires the active participation of researchers, development partners, financial institutions, donors, and target customers. Research in the rural and agricultural finance may focus on developing innovative products, services, and delivery models; bundling financial products and evaluating their impacts; options for creating linkage of credit with business development services; identifying farmers preferences for new financial products and services; integrating business development services, financial literacy,
business planning with conventional products; and adoption existing financial products and services and delivery models to specific agricultural crop and livestock commodities.

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Authors and Publishers

Author(s), editor(s), contributor(s)

Yitayih, Mulugeta , Kassie, Girma T. , Dessie, Tadelle

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Geographical focus