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Abstract

Rural financial markets differ from urban markets, but they appear to work reasonably well at supplying credit to rural borrowers. When urban and rural loans are compared, average interest rates, collateral requirements, and other terms are nearly identical. Furthermore, national opinion surveys have generally found that rural borrowers are at least as satisfied with their financial service provider as are urban borrowers. The nature of rural economies— small communities, small borrowers, and undiversified industries— can lead to disparities in the availability of financial services among individual borrowers and communities, but financial market imperfections have not detracted substantially from overall rural growth.

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