Years ago, I attended a workshop in Ghana that left me with a concern about the black swans that often appear in development projects (Dowswell). That concern eventually led me to realize that the documents used to form and secure... more
Years ago, I attended a workshop in Ghana that left me with a concern about the black swans that often appear in development projects (Dowswell). That concern eventually led me to realize that the documents used to form and secure funding for development projects seldom identify the unanticipated events that could later undermine the project. In the following I suggest that the development community might adopt something like the “Doctrine of Disclosure” used by accountants where those people who write contracts must specify in plain language the black swans that might negatively impact the project. For example, if the project involves building a bridge over a large river that may experience a major flood every 25 years -- which might wash out the abutments of the bridge -- that caveat should be clearly stated in any contract to build the bridge. I illustrate my suggestion by using a case I learned about in the Ghana workshop. Reading a recent book about the project reanimated my interest in that case (Hager).
Fifty years ago, I attend a seminar in the Central Bank of Bangladesh and was first exposed to what later was called microfinance. There, Professor Mohammad Yunus from Chittagong University described a microlending program for poor women... more
Fifty years ago, I attend a seminar in the Central Bank of Bangladesh and was first exposed to what later was called microfinance. There, Professor Mohammad Yunus from Chittagong University described a microlending program for poor women that he managed in a village near his university. Based on my earlier experiences with somewhat similar small-famer credit programs (SFCPs), I was skeptical about the future sustainability and effectiveness of his efforts. Most of the SFCPs I had seen suffered from policies that eventually wrecked most of them. Bangladesh was a Muslim country, for example, where the charging of interest was frowned upon and called riba (an unjust gain). At best, making small loans to poor people is relatively expensive so I thought Professor Yunus faced a stiff wind to sustain his efforts in a culture that frowned on charging any interest, let alone rates that allowed lenders to sustain their programs.
Two types of self-help groups are mentioned in the literature: rotating savings and credit associations and accumulating savings and credit associations. Five subtypes of each of these two groups are described in the paper, along with... more
Two types of self-help groups are mentioned in the literature: rotating savings and credit associations and accumulating savings and credit associations. Five subtypes of each of these two groups are described in the paper, along with their strengths and weaknesses.
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Page 1. THE USE OF SOCIO-ECONOMIC RESEARCH IN DEVELOPING A STRATEGY OF CHANGE FOR RURAL COMMUNITIES: A COLOMBIAN EXAMPLE* DW Adams and AE Havens The University of Wisconsin I. Introduction ...
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The paper examines the main problems for rural financial markets which have resulted from national policy and the sorts of response to such problems: including nationalization of banks, new specialist institutions, loan quotas lending... more
The paper examines the main problems for rural financial markets which have resulted from national policy and the sorts of response to such problems: including nationalization of banks, new specialist institutions, loan quotas lending guarantees, and differential interest rates. The ...
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Durante los últimos años varios países latinoamericanos han iniciado programas de CS en áreas rurales. En la mayoría de los casos el desarrollo de estos programas ha estado estrechamente asociado con el fomento de las actividades de la... more
Durante los últimos años varios países latinoamericanos han iniciado programas de CS en áreas rurales. En la mayoría de los casos el desarrollo de estos programas ha estado estrechamente asociado con el fomento de las actividades de la Reforma Agraria, ...
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by Dale W Adams** I
Policymakers in Latin America increasingly are turning to policies that have high economic rates of return and a favorable impact on income distribution. By providing financial services to small businesses and poor households -which... more
Policymakers in Latin America increasingly are turning to policies that have high economic rates of return and a favorable impact on income distribution. By providing financial services to small businesses and poor households -which normally lack such services- credit unions help secure growth with equity. The challenges faced by Latin America's credit unions today are likely to force them to further modernize and consolidate, fine tune their inherent advantages, improve mechanisms for prudential regulation, and find ways to increase their share of low and middle-income markets. Safe Money presents the new thinking on how credit unions can compete effectively in modern financial markets while still retaining their social mission.
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... Brazil. Unlike Bangladesh, borrowers in Brazil were highly sensitised to changes in the purchasing power of money. ... cent. An unweighted average of the annualrates of inflation exceed 40 per cent over this period. No ...
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This study documents the extent of savings in representative rural households in South Korea during 1962–76. A technique for measuring permanent income from cross‐section data is used to estimate marginal savings behavior. The results... more
This study documents the extent of savings in representative rural households in South Korea during 1962–76. A technique for measuring permanent income from cross‐section data is used to estimate marginal savings behavior. The results show that households saved a remarkably large part of their incomes. During the late 1960s these savings were, on the margin, about one‐fifth of permanent incomes and about four‐fifths of transitory incomes. Authors also conclude that useful measures of permanent and transitory income can be estimated from cross‐section data.
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Interest rates on formal agncultural loans m most low income countries are less than rates of inflation and below rates charged on commercial loans. Many development economists have criticized cheap credit because they felt it induced... more
Interest rates on formal agncultural loans m most low income countries are less than rates of inflation and below rates charged on commercial loans. Many development economists have criticized cheap credit because they felt it induced farmers to use too much capital (such as tractors) at the expense of labour. This argument is an extension of neoclassical economics where mterest rates strongly influence investment dec1s10ns. Four arguments are evaluated that might be used to support this hne of thinkmg under conditions where rural fmanc1al markets are fragmented: low interest rates reduce the cost of capital inputs relative to other inputs, low interest rates result m borrowers using discount rates on future benefits from capital inputs that are also too low, cheap loans are often tied to the use of capital mputs, and low mterest rates cause lenders to concentrate loans m the hands of producers who use relatively large amounts of capital mputs. These supportmg arguments are weak and...
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Page 76. Are the Arguments for Cheap 6 Agricultural Credit Sound? Dale W Adams Rare is the government of a low-income country that does not fix low nominal interest rates on agricultural credit and even lower rates on loans designated for... more
Page 76. Are the Arguments for Cheap 6 Agricultural Credit Sound? Dale W Adams Rare is the government of a low-income country that does not fix low nominal interest rates on agricultural credit and even lower rates on loans designated for the rural poor. ...
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Page 1. 9 Background Paper No. EFFECTS OF FINANCE ON RURAL DEVELOPMENT By Dale W Adams and Robert C. Vogel January 29, 1982 Page 2. Effects of Finance on Rural Development by Dale W Adams and Robert C. Vogel ...
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© Practical Action Publishing, 2016, www.practicalactionpublishing.org http://dx.doi.org/10.3362/1755-1986.2016.010, ISSN: 1755-1978 (print) 1755-1986 (online) The microcredit dream involved using loans to solve poverty. But, the dream... more
© Practical Action Publishing, 2016, www.practicalactionpublishing.org http://dx.doi.org/10.3362/1755-1986.2016.010, ISSN: 1755-1978 (print) 1755-1986 (online) The microcredit dream involved using loans to solve poverty. But, the dream eventually proved to incorporate serious misconceptions: that most borrowers could become successful entrepreneurs; that new businesses were easy to start and sustain; that poor borrowers had many attractive investment opportunities; that most loans were used in income-producing investments; that borrowing did not add to the borrower’s risks; and that microlending was inexpensive. Eventually, many microloans were used to deal with immediate risks facing the household, rather than to build income streams. Nonetheless, microlending revealed that many poor people had significant capacities to borrow and repay loans, and that borrowing made their lives less difficult. Recent successes in mobilizing savings indicate that poor people also may have surprisingly large capacities to save, thereby fostering a microsaving dream. The paper compares the strengths and weaknesses of two popular models used to promote savings: the savings-group model, first used in Africa, and the self-help-group model widely used in Asia. The savings-group model offers savers more attractive features than does the self-help-group model. Savings groups offer balanced menus of financial services, and, while neither loans nor savings are cures for poverty, both can significantly ease the plight of the poor.