Sustainable Rural Finance: Prospects, Challenges and Implications

''Market failures in rural finance, and related issues of adverse selection, moral hazard, and transaction costs justify targeted interventions to ensure that services reach the poor and the un-banked sustainably. However, while there is general consensus on the 'components' that should go into the computation of interest rate to be charged by a micro-credit service provider (particularly those aiming to achieve the 'double-bottom-line' objective), the 'level' under each component is left to be fixed by each actor. This gives rise to various applications, which often is a cause for high level controversies among stakeholders in rural development, some justified while others not." Paper prepared by Getaneh Gobezie [http://topics.developmentgateway.org/rc/UserProfile.do?userId=934061], for the next Annual Conference of the Association of Ethiopian Microfinance Institution (AEMFI).

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Contributor: Carmen Villegas Caballero
Published Date: March 25, 2008