@article{Turvey:280048,
      recid = {280048},
      author = {Turvey, C. G. },
      title = {IFAD RESEARCH SERIES 10 - Inclusive finance and inclusive  rural transformation},
      address = {2017},
      number = {2165-2018-7811},
      series = {IFAD Research Series },
      pages = {40},
      year = {2017},
      abstract = {This paper provides an overview of concepts, issues and  research on the relationship between financial inclusion  and inclusive rural transformation. When considering how  the growth of demand for financial services is related to  the broader processes of structural and rural  transformation, the evidence shows that agricultural credit  provides positive returns, but still with small farm and  gender biases. Liberalization of financial markets may not  have had the desired spillover effects into rural credit,  so there may be justification for public intervention.  Effective microcredit programmes might also need to be  coupled with outreach and technical assistance in order to  achieve desired goals and objectives. In addressing how  innovations in rural finance contribute to making access to  financial services and rural transformation more inclusive,  the report focuses on demand relationships. Farmers who use  credit have moderately inelastic to elastic demands.  Policies that curb interest rates or otherwise lower the  cost of credit may encourage credit demand. Research on  risk rationing suggests a behavioural aspect to credit that  needs to be considered. Policies that fail to consider  collateral and risk may fail if risk-rationed farmers will  either not borrow at all, or borrow less than optimal  amounts of credit. Policies targeting inclusive finance for  inclusive transformation should be targeted towards  specific problems. If subsidies are required, they must be  smart – in the sense of minimizing market distortions – and  are best targeted towards lenders as incentives to increase  loans in poverty or underserved communities, women  borrowers and indigenous peoples. When markets fail,  agriculture governments should consider state-run  government-sponsored enterprises. Finally, agricultural  lenders, including microfinance institutions, must  reconsider their approach to disciplined savings and  lending activities. Many farmers with credit demand will  not borrow because the payment terms do not consider the  risk or match the liquidity cycle of planting and  harvesting.},
      url = {http://ageconsearch.umn.edu/record/280048},
      doi = {https://doi.org/10.22004/ag.econ.280048},
}