Lack of credit access is severe in low income and poor families that are normally considered to have fewer opportunities to borrow from banks due to insufficient valuable assets for collateral. These low-income households face limited opportunity to acquire new technology and working capital for agricultural production and thus tend to fall behind. As a result, providing access to finance to low-income rural households has been considered an important component of any rural development strategy. Microfinance programmes, in particular, have been gradually embedded in national strategies of many developing countries as they are poverty-focused. They aim to facilitate the access to financial services such as credit for the poor who are usually disadvantaged in terms of access to conventional financial services from formal financial institutions. The objective of this book is to provide an overview of microfinance programmes in Asia focusing in particular on the determinants of the accessibility of rural households to microcredit. The book studies seven Asian countries such as China, Malaysia, Vietnam, Thailand, the Philippines, Indonesia, and Bangladesh with two specific case studies.

Rural Financial Markets in Asia: Paradigms, Policies and Performance specifically examines the commercialization of the rural economy and the provision and use of rural financial services since the 1970s.

Until recently the use of agricultural credit as a developmental tool seemed clear and straightforward. Most concerned people believed that increases in the volume of cheap credit were necessary to boost agricultural production, and that the rural poor could be brought into the mainstream of development through supervised credit programs. It seemed that certain ideal types of rural credit institutions offered the promise of meeting farmers' credit needs, and that experience in the industrialized countries with cooperatives and specialized agricultural finance institutions could be effectively transplanted to low-income countries. This collection of readings highlights facets of rural financial markets that have often been neglected in discussions of agricultural credit in developing countries. It moves beyond a narrow concern with the simple provision of credit to a broad consideration of the performance of rural financial markets and of ways to improve the quality and range of financial services for low-income farmers. It reflects new thinking on the design, administration, evaluation and policy framework of rural finance and credit programs in developing countries.

Originally published in 1985, twenty-three chapters are brought together in 4 parts dealing with, respectively, problems in rural finance, interest rate policies, politics and finance, and new directions for rural financial markets. In an introduction it is argued that cheap and abundant credit is often regarded as essential for rural development but that actions taken on the basis of this assumption have given disappointing results. Low-interest policies and the improper use of financial markets are seen as the principal reasons for this. It is recommended that higher and more flexible interest rates are allowed and that little or no attention is given to target loans. Informal lenders are thought to offer valuable services therefore they should not be discouraged. More emphasis should be put on voluntary savings mobilization and access to formal loans by non-farm rural firms. It is concluded that many traditional agricultural credit programmes are counterproductive and that attractive product and input prices together with higher yields would be more powerful in stimulating agricultural development.

This article investigates how financial development helps to reduce poverty directly through the McKinnon conduit effect and indirectly through economic growth. The results obtained with data for a sample of developing countries from 1966 through 2000 suggest that the poor benefit from the ability of the banking system to facilitate transactions and provide savings opportunities but to some extent fail to reap the benefit from greater availability of credit. Moreover, financial development is accompanied by financial instability, which is detrimental to the poor. Nevertheless, the benefits of financial development for the poor outweigh the cost.

The purpose of the 'Microfinance Handbook' is to bring together in a single source guiding principles and tools that will promote sustainable microfinance and create viable institutions.