FINANCE for the poor

December 2006 • Volume 7 Number 4

A QA QA QA QA Q U A R T E R L YU A R T E R L YU A R T E R L YU A R T E R L YU A R T E R L Y N N N N N E W S L E T T E RE W S L E T T E RE W S L E T T E RE W S L E T T E RE W S L E T T E R O FO FO FO FO F T H ET H ET H ET H ET H E F F F F F O C A LO C A LO C A LO C A LO C A L P P P P P O I N TO I N TO I N TO I N TO I N T F O RF O RF O RF O RF O R M M M M M I C R O F I N A N C EI C R O F I N A N C EI C R O F I N A N C EI C R O F I N A N C EI C R O F I N A N C E

The quarterly newsletter of the FFFFFocal Pocal Pocal Pocal Pocal Point for Microfinance oint for Microfinance oint for Microfinance oint for Microfinance oint for Microfinance at ADB aims to provide information on microfinance. Articles in the newsletter, however, donot necessarily reflect official ADB views. Articles may be reprinted with proper acknowledgement of the source. Please address any inquiries, comments, andsuggestions concerning the newsletter or its content to the Focal Point for Microfinance; Office of Director General; East Asia Department. Asian DevelopmentBank, 6 ADB Avenue, Mandaluyong City, 1550 Metro Manila, Philippines. Tel +63 2 632 6931 • Fax +63 2 636 2337 • E-mail: nfernando@adb.org.In this publication, $ refers to US dollar.

Rural Finance Today: Advancesand Challenges 1

Selected Publications onMicrofinance 7

IN THIS ISSUE

TOWARD THE GRAND VISION

We are on the pathfor microfinanceto realize its grandvision of creatingaccess to finance forall. The developmentsof the last decadeallow us to fastforward ten yearsand see enormousand astoundingadvances, many madepossible becauseof what has beenachieved to date.

Elisabeth Rhyneand Maria Otero

ACCION International

BY GEETHA NAGARAJANInternational Consultant in Rural and Microfinance

RICHARD L. MEYERProfessor Emeritus, The Ohio State University1

Rural finance generally refers to the provision of financial services throughformal, semiformal and informal institutions to rural farm and nonfarm popula-tion at all income levels.

In the past, many rural finance programs failed due to a combination of lack ofattention to institution building, faulty design and implementation, and badmacro policies driven by political interests. They were generally unable to closethe huge gap between demand and supply. The gaps were created by insuffi-cient and inefficient products and services to manage high transaction costs,weak institutional capacity, seasonality, farming risks, and lack of usable collat-eral that are inherent to rural areas. As a result, rural finance was almost consid-ered a lost cause in the late 1980s.

RURAL FINANCE TODAYCurrently, however, advances are being made to efficiently expand rural finan-cial services. New and promising developments that may potentially push therural finance frontier forward are observed. Indeed, many advances are buildingon new learning from and strengths of microfinance.

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The major breakthrough forthe current form of rural fi-nance occurred with the evo-lution of the new rural financeparadigm in the late 1980s.The paradigm is premised onthe fact that rural people arebankable, and rural clienteleare not limited only to farmersand they demand variedtypes of financial services for

which they are willing to pay. It advocates demand-driven de-sign and efficient provision of multiple financial products andservices through an inclusive financial sector comprised ofsustainable institutions serving many diverse clientele in ruralareas.

The new paradigm, learned from past mistakes of supply-drivenrural finance, quickly moved to push for innovations to man-age risks, information, incentives, and contract enforcementbarriers that increase costs of operations in rural areas andhinders sustainable rural outreach. The following discussionhighlights several advances that are being made in today’srural finance sector, and identifies many remaining challenges.

ADVANCES IN INSTITUTIONS

Government-owned agricultural development banks(AgDBs) still dominate in many countries and somehave been successfully reformed. While there is noassurance that a reformed or privatized AgDB will strive toexpand its agricultural and rural outreach aggressively, manyAgDBs have been, nonetheless, reformed and re-engineered.Whereas many are failing, such as in the People’s Republic ofChina, Egypt, Pakistan, and Ecuador, there are some successstories, such as the Agricultural Bank of Mongolia (now calledKhan Bank), the National Microfinance Bank in Tanzania, andBANRURAL in Guatemala, where they are now profitable andprivatized. The “technology” of reforming AgDBs is now wellunderstood but reforms tend to take a long time to work andrequire long-term political and financial commitments and tech-nical assistance. When governments are blocked from usingAgDBs as a means to allocate subsidies for economic andpolitical interests, they tend to seek other channels such as

microfinance institutions (MFIs), cooperatives, provincialbanks, and village or community funds.

Several microfinance institutions are increasing theirrural operations and are becoming important suppli-ers of rural financial services. MFIs such as BASIX inIndia, and microfinance banks such as Banco Los AndesProcredit (formerly Caja Los Andes) in Bolivia, Banco ProCreditEl Salvador (formerly Calpiá) in El Salvador, and K-Rep Bank inKenya have now developed specific rural products and tech-nology to deliver rural financial services. ACLEDA Bank inCambodia has expanded its rural financial services significantlyin recent years. Many MFIs in Bangladesh are already servingmicroenterprises in rural areas. In some cases, MFIs may needto cross-subsidize their rural operations with robust, urban op-erations. As a result, weak and small MFIs that limit coverageonly to rural areas may not be suitable to provide sustainableservices. In addition, few MFIs have effectively devised prod-ucts and systems to make large numbers of seasonal agricul-tural loans.

Member-based/owned informal institutions such asself-help groups (SHGs) and savings and credit coop-eratives (SACCOs) are increasing and have the poten-tial to play an important role, especially in remoterural areas. SHGs are growing rapidly in India and are nowbeing replicated in some African countries. Some SHGs arefederating to intermediate funds and also access external funds.While SHGs are suitable for rural areas, only those SHGs thatare well connected to formal financial institutions tend to effec-tively provide services without receiving continuous supportfrom external sources for funds and technical assistance.2 Theemerging lessons show that SACCOs appear to be suitable forremote rural areas only if their funds are managed well. In Niger,CARE introduced one of the innovative types of local, self-managed systems of financial intermediation through SACCOsfor use in remote rural areas. CARE provides only training andmonitoring, while all funds lent come from member savings. Nowritten records are kept to minimize paper work for members inremote areas who are generally illiterate. All information aboutamounts saved, lent, and due at each meeting must be remem-bered by the members. The program has experienced steadygrowth and some groups have formed local networks that areregistered to facilitate linkages with other financial institutions,

The new ruralfinance paradigmis premised onthe fact thatrural people arebankable

including credit unions, to access services that cannot be pro-vided locally. Several small SACCOs in rural Kenya now hireprivate management agencies to assist women to form groups,keep accounts, make monthly contributions called shares, andconvert the shares into loans.

ADVANCES IN PRODUCTS AND SERVICES

Flexible savings products are being developed toservice rural areas. Khrisna Bhima Samruddhi (KBS), a localarea bank of BASIX, India, offers a flexible daily-deposit schemein which savings are collected daily at the doorsteps of ruraldepositors by mobile deposit collectors (called microsavingsagents) who typically cover about 150 depositors a day.3 Themodel is similar to Safesave’s approach in Bangladesh. As anincentive, the bank offers loans of up to $110 to depositorswho have regularly saved for a minimum period of 100 dayswithout an interruption lasting more than 20 days. In additionto MFIs, Post Office Savings Banks are emerging as significantproviders of deposit services in rural areas of India, Kenya,Tanzania, and South Africa, especially catering to the poor.Use of lockboxes for clients to deposit their savings and col-lect the contents of the box at periodic intervals are observedas in the case of the “ganansya box” provided by several RuralBanks in the Philippines. These savings are generally used forconsumption smoothing and some level of asset creation. Re-cently, the Grameen Bank’s new long-term savings programhas become a highly accepted product that functions as a pen-sion plan for poor rural women.

Some institutions are now cross-subsidizing their rural opera-tions with urban operations. For example, COOPECS, a coop-erative society in West Africa is migrating to urban areas tocapture larger volumes of savings to make rural deposit mobi-lization viable. Some institutions, such as BURO Tangail andASA in Bangladesh, are increasing savings volume by includ-ing clients higher in the poverty strata as associate memberswho are only eligible to save with the institutions. However, itis not clear if such practices will be permitted by the CentralBank in Bangladesh to continue in future. Piggybacking sav-ings services on to other delivery systems, with savings serv-ices offered at a time and place where clients are already trans-acting other business, are used to reduce the costs of depositmobilization. Examples include the use of milk cooperatives in

Nepal, and lottery and mobile phone kiosks in Haiti and India.Mobile banks in Viet Nam and Kenya, if scaled up, can reducetransaction costs for financial institutions if infrastructure fa-cilities are fair.

Rural leasing, under certain conditions, provides aviable financial option for rural clients. The rural leasingarrangements currently found in Central Asia, Russia, Africa,and Latin America suggest advantages for both lessors andlessees in terms of costs and risks involved. For example, JohnDeere in Mexico, Uzelmalhosh Leasing in Uzbekistan, andAgroMash Leasing in Kazakhstan operate exclusively in ruralareas and provide leasing contracts for agricultural equipmentand processing units. The Grameen Bank is the largest pro-vider of leases to rural microenterprises in Bangladesh with alease portfolio valued at $22 million per year. Grameen andAgroMash reported no repayment problems on their leasingportfolio, while John Deere and Uzelmalhosh reported a portfo-lio at risk (30 days) of about 4%. The Network Leasing Com-pany in Pakistan offers leasing for agriculture-based enterprisesin small towns adjacent to villages. Experiences now indicatethat leasing may not be suitable for remote areas because ofthe high costs of transporting equipment and machinery, andthe lack of servicing stations for the leased equipment. Also,the vulnerable poor may seldom require assets that are suitablefor leasing for their income-generating activities. Leasing prod-ucts are, nonetheless, suitable for individual-based transac-tions but require a significant down payment or collateral forreducing risks for the lessor. Many legal and tax issues mustalso be resolved before leasing can become an attractive alter-native for loan products in rural areas.

Index-based insurance is developed to minimizeinsurance risks in somerural areas. A local area bankof BASIX, India, KBS col-laborates with ICICI LombardGeneral Insurance Companyto provide weather-basedcrop insurance to small farm-ers based on rainfall data inthe region over the past 30years. Payouts are based onthe deviation of actual rain-

The GrameenBank is the largestprovider of leasesto rural micro-enterprises inBangladesh

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fall from the predeterminedrainfall index. The product isnow piloted for small farmersin dryland areas growinggroundnut and castor crops.Since June 2003, KBS hasbought a bulk insurancepolicy from ICICI Lombardand has sold individual insur-ance policies to individualfarmers in an area hit by con-secutive droughts. The WorldBank is now piloting index-based livestock insurance inMongolia in dzud (winter bliz-zards) affected areas. The in-surance is expected to en-

hance the financial security of households by reducing theimpact of livestock deaths due to blizzards. The index-basedweather insurance products, however, are at their early stagesof development and their viability is yet to be fully demon-strated. They can be ineffective and too costly in marginalfarming areas and in areas where weather trends are frequentlychanging and highly unpredictable.

Remittance services are increasing for rural clientsthrough strategic partnerships between remittanceproviders and MFIs. In India, the ICICI Bank extends remit-tance services to rural areas using alliances with computer ki-osks that are equipped with low-cost automated teller machines(ATMs). The International Remittance Network (IRnet), in part-nership with the World Council of Credit Unions, provides re-mittance services in more than 40 countries including the ruralPhilippines. It uses an electronic funds transfer service andcharges a flat fee of $10 to send up to $1,500. While senders arerequired to be credit union members, recipients are not. It isfound to benefit credit unions by attracting new clients whotend to open savings accounts and thereby accumulate finan-cial assets. The Microfinance International Corporation, a pri-vate remittance company that provides remittance services tothe poor immigrants in the United States (US) from El Salvadorby linking with MFIs with rural reach in El Salvador. It usesan electronic settlement system over the Internet, called theCooperative Open Banking Information System (COBIS) to

make instant transfer of remittances. The remittance serviceproviders, however, are now required to comply by the newanti-money laundering regulations that may potentially raisesome costs.

Products that comply with Islamic laws are emerging.Insurance products that conform to Islamic sharia laws, calledtakaful, have been developed in some Islamic countries, in-cluding Malaysia and Sudan. Takaful is a slight variation ofmutual insurance and is based on cooperation, shared responsi-bility, and joint indemnity. Losses are divided and liabilities arespread according to a community pooling system. The Agricul-tural Mutual Fund was established in Lebanon in 1997 to pro-vide takaful health insurance for the rural poor. Each insuredfamily is required to pay $10 each month but communities coverthe cost for the poorest who cannot afford to pay. In Afghani-stan, group-based Murabaha loans that follow Islamic princi-ples are currently being pilot tested for rural women. The MFIbuys the asset and sells it to the client with a markup.4

ADVANCES IN PROCESSES

A better understanding of financing through valuechains is developing. In most cases, traders are consideredimportant links in the value chains. The Oriental Bank and StateBank of India in Maharastra, India are extending loans to smallpoultry farmers in rural areas who are under buyback contractswith large poultry integrators. The contractual relations withintegrators act as a kind of guarantee for the loan. The AGENTproject of CARE in Zimbabwe initially provided a temporaryguarantee to wholesalers/distributors that provide inputs asinventory credit to traders in rural areas. Since 1995, a total of580 traders were linked to the private wholesalers, and 60%were fully absorbed into the private-sector distribution net-work. Farmers have benefited from the increased product rangeoffered through the program, such as a wider variety of seedand fertilizer, basic processing and irrigation equipment, andgeneral construction materials. In Peru, a large trader, Critecnia,sells inputs, buys, and markets cotton for contract farmers, andalso brokers loans on their behalf. The farmers provide someloan guarantees in the form of land. This arrangement has ledmany banks to finance cotton farmers who were previouslyrejected for lack of guarantees. Trading centers in India andNepal, such as in wholesale markets, warehouses, and grading

Many legal and taxissues must alsobe resolved beforeleasing canbecome anattractivealternative forloan products inrural areas.

and packaging facilities, appear to encourage traders to link upwith small farmers to source products. These linkages in turnare reported to increase access to finance for farmers with as-sured markets. There is now some experimentation with use ofreverse factoring mechanisms in Moldova and Macedonia toprovide bank loans to new and risky small and medium (SMEs)processing and manufacturing enterprises in rural areas. Here,the SMEs are assessed based on the accounts receivables fromlarge and reputable buyers. The large buyers guarantee thebanks of the accounts receivables. For trade credit to flourish,however, an enabling environment is required in which private-sector growth is not discouraged.

Partnerships between commercial banks and informalsystems are expanding rural outreach to new clients.For example, the SHG-commercial bank linkages in India haveresulted in reaching over a million SHGs with a total of 15 mil-lion members, 90% of whom are rural poor women. The SHG-bank linkages are reported to have made a significant impacton participating members, have reduced the costs of providingbanking services to rural areas and the poor, and have reportedhigh repayment rates.5

Strategic alliances among various types of institutionsare growing as a way to offer new financial productsin rural areas. In India, a nonbank financial institution suchas the local area bank of BASIX, KBS, buys bulk insurancefrom ICICI Lombard Insurance and markets them to peanut,castor, and soy farmers through partnerships with local com-mission agents, PRADHAN which is a local NGO, and to somepaddy farmers through an agribusiness company. A few MFIsin India, Uganda, Bangladesh, and Zimbabwe now provide lifeand health insurance products through partnerships with localhospitals and specialized insurers. MFIs engaged in remittancesto and from rural areas such as National Microfinance Bank ofTanzania, Uganda Microfinance Union, Equity Building Soci-ety in Kenya, and Centenary Rural Development Bank in Ugandapartner with Western Union and Money Gram as subagents.The MFI Banco ProCredit El Salvador entered into an agree-ment with the largest remitting agent to El Salvador from the USto ensure safe, quick, and cost-effective transfers. Alliancesbetween the MFI, Beehive Financial Services, and Teba Com-mercial Bank in South Africa allow provision of debit cards forrural self-employed, borrower clients of the MFI to lower in-

come rural populations. The partnership agreement in Boliviabetween two MFIs—FIE and Pro Mujer—permits FIE to oper-ate teller windows within Pro Mujer to provide deposit serv-ices in rural areas.

Use of electronic technology is revolutionizing theprovision of rural financial services, especially in coun-tries where the information technology sector is lessregulated than the financial sector. In technologicallyadvanced developing countries, the use of electronic bankingtechnologies such as hand-held personal digital assistants,smart cards, point of service devices, ATMs, and phone andinternet banking are found to be effective in reaching ruralareas and reducing transaction costs. The ICICI Bank in Indiaand the MFI PRODEM in Bolivia are installing ATMs in fairlydeveloped rural areas. Some MFIs in India and South Africa areintroducing electronic smart cards that function like debit cards.The use of mobile phones to effect payments and loandisbursals (m-payments and m-banking) is being done in thePhilippines, South Africa, and Kenya. The mobile banks of EquityBuilding Society in Kenya use Global System for Mobile Com-munications technology to process transaction data on-lineand provide rural clients with a greater range of services. Solarunits, rechargeable batteries, and inverters provide uninter-rupted power to laptops. An initiative started by the Hewlett-Packard Company in Uganda is now testing a Remote Transac-tion System that enables cash deposits and withdrawals byrural MFI clients through a network of loan officers, ruralbranches, and/or agents.

Electronic banking helps drive down the costs of handling manysmall transactions in areas where high-tech alternatives arefeasible. Large countries that have recently become techno-logically advanced—such as Brazil, People’s Republic of China,India, and South Africa—canpossibly leapfrog other MFIsin rural finance by utilizingtheir technological edge tocounterbalance some con-straints due to their size. Butelectronic banking may notsuit all clients, especially thevulnerable poor. It may pro-vide convenience and secu-

But electronicbanking may notsuit all clients,especially thevulnerable poor

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rity for slightly larger depositors and may lower the costs forfinancial institutions, but it may not be relevant for many smallerdepositors in rural areas.

REMAINING CHALLENGES

The possible reintroduction of interest rate ceilings.A growing concern in countries with competing rural financeinstitutions is the potential for overburdening clients with mul-tiple debts. The public clamor raised by heavily indebted bor-rowers in such diverse places as Bolivia, India, and Sri Lankahas led to political calls for loan write-offs and subsidized inter-est rates. Such controls were one of the biggest factors thatcontributed to the failure of most small farmer credit programsin the past. If these proposals are adopted, they will affect thesustainability of rural financial institutions and may even leadto their closure or at least constrain their expansion. This wouldleave the clients with few choices for financial services. Forexample, the recent government imposed interest rate ceilingand targeted credit for formal financial institutions serving ru-ral areas in India which are hampering viability. It also tends tocreate unfair competition to those institutions that follow mar-ket-based principles. A more positive development is the ex-pansion of credit bureaus so the institutions can better moni-tor client indebtedness and loan repayment.

Reducing costs and risks of e-banking in rural areas.For electronic banking to be cost-effective, scale is necessary.Also, it is important to bundle financial services into the exist-ing physical infrastructure and to widen the client base throughstrategic partnerships with service providers. These involveinitiatives that build public-private partnerships. It is also chal-lenging to deal with security issues, identity thefts, breakdownin communications leading to loss of information and compli-ance with anti-money laundering laws.

Developing an enabling policy environment. A macropolicy environment that can integrate rural finance into thebroader financial sector to access capital funds for the institu-tions, and recognition of movable property and land user rightsas collateral for opening access for long-term financing forrural populations are important. But it is challenging inmany developing countries due to weak political will to shiftto market-based systems.

CONCLUSIONA single formula does not ex-ist for successfully developinginstitutions, products, serv-ices, and processes for ruralfinance. The varying condi-tions found in rural areas callfor flexibility and a diverse setof approaches. Experimenta-tion is required with products,services, and delivery mecha-nisms that use electronic tech-nology to reduce informationand delivery costs, and modi-fications of existing financialtechnologies that recognizeglobalization and value chains.

There is also a need to realize that some rural clientele mayrequire other services in addition to finance. For example, thehighly under-serviced smallholder plantation crop subsectorand the vulnerable ultra poor may require other services inaddition to rural finance. These require development of humancapacity that can boldly experiment, learn, and provide multi-ple services in an effective, sustainable, and efficient way. Tothat end, exploring strategic alliances and collaborative link-ages among various suppliers of services in rural areas, includ-ing private sector participants, is important. These involvelonger time periods to realize results that may not be very trans-parent unless clear results-based monitoring is in place fromthe beginning. Patience and readiness to face some failures areessential virtues.

Although many countries are adopting the new paradigm, prob-lems emerge resulting in movement back and forth along thecontinuum between the new and old paradigms rather than aclear-cut shift to the new paradigm. The possibility exists thatpolicy makers will slide back to the old paradigm such as no-ticed in recent introduction of ceilings on interest rates in someAsian countries and elsewhere. A strong commitment from thegovernments is necessary but hard to find in many developingcountries. Nonetheless, it appears that the recent positive de-velopments result in “some new wine in the old bottle of ruralfinance.”

A single formuladoes not existfor successfullydevelopinginstitutions,products, services,and processesfor rural finance

ENDNOTES1 This paper is primarily drawn from a longer research document titled

“Rural Finance: Recent Advances and Emerging Lessons, Debates, andOpportunities” (www.ruralfinance.org). The authors acknowledge theFord Foundation for the funding and insightful comments, and generosityof several people who shared valuable information and documents toconduct the research. Valuable feedback from Nimal Fernando at theAsian Development Bank helped shape this note. However, the viewsexpressed in the paper are our own and do not represent those of theFord Foundation, or its employees.

2 See Murray and Rosenberg, 2006, “Community-managed Loan Funds:Which Ones Work?,” www.CGAP.org, for related discussion on role ofexternal funds in member owned institutions.

3 Savings with a minimum of $0.22 to a maximum of $5 per day perdepositor are collected. On average, clients deposit about $0.45 per dayfor a period ranging from 60 to 90 days. Depositors are allowed to

SELECTED PUBLICATIONS ON MICROFINANCEBOOKSDowla, Asif and Dipal Baruwa, 2006. The Poor Always Pay Back: TheGrameen II Story. Bloomfield: Kumarian Press.

Islam, Nurul. 2006. Reducing Rural Poverty in Asia: Challenges andOpportunities for Microenterprises and Public Employment Schemes.Binghamton, NY: Haworth Press.

Watson, April Allen and Christopher Dunford. 2006. From Microfinanceto Micro Change: Integrating Health Education and Microfinance toEmpower Women and Reduce Poverty. New York: United Nations Fundfor Population Activities.

JOURNAL ARTICLESAbbink, Klaus, Bernd Irlenbusch, and Elke Renner. 2006. Group Size andSocial Ties in Microfinance Institutions. Economic Inquiry 44(4): 614–628.

Barnett, K. 2006. Micro-Credit as a Banking Business—A Case Studyfrom ProCredit Nicaragua. RMA (The Risk Management Association)Journal 88(6): 62–67.

Dowla, Asif. 2006. In Credit We Trust: Building Social Capital by GrameenBank in Bangladesh. Journal of Socio-Economics 35(1): 102–122.

Green, Christopher J., Colin H. Kirkpatrick, and Victor Murinde. 2006.Finance for Small Enterprise Growth and Poverty Reduction in DevelopingCountries. Journal of International Development 18(7): 1017–1030.

Hossein, Caroline, Julie Redfern, and Richard Carothers. 2006. An EgyptianCase Study: Financial Services for Young People Who Work. InternationalJournal of Emerging Markets 1(4): 329–340.

Jagannatha Rao, R. 2006. Role of Self-Help Groups in GeneratingMicrocredits and Linking Natural Resource Management In Karnataka:Macro and Micro Level Analysis. International Journal of Agricultural

withdraw after 6 months of initial savings or any time before that with5 days’ notice. Interest is about 3% per annum calculated on dailyaverage outstanding balances. Only those depositors who save regularlywithout a break lasting more than 20 days are paid interest on thedeposits.

4 The concept refers to the sale of goods at a price, which includes aprofit margin agreed to by both parties. The purchase and selling price,other costs, and the profit margin are clearly stated at the time of thesale agreement. The microfinance institution (MFI) is compensated forthe time value of its money in the form of the profit margin and not inadditional interest on late payments. This is a fixed-income loan for thepurchase of a real asset with a fixed rate of interest determined by theprofit margin. The asset remains in the ownership of the MFI until theloan is paid in full.

5 Seibel and Karduck (2004), based on a study of SHGs in Karnataka,India, showed that annual transaction costs of the linked SHGs amountedto $27 per group or 1.22% of loans outstanding to members.

Resources, Governance and Ecology (IJARGE) 5(4): 377–398.

Johnson, Susan, Marrku Malkamaki, and Kuria Wanjau. 2006. Tacklingthe “Frontiers” of Microfinance in Kenya: The Role for DecentralizedServices. Small Enterprise Development 17(3): 41–53.

Lal, Abhishek and Elizabeth Israel. 2006. An Overview of Microfinanceand the Environmental Sustainability of Smallholder Agriculture. IJARGE5(4): 356–376.

Lawrence. Peter. 2006. Finance and Development: Why Should CausationMatter? Journal of International Development 18(7): 997–1016.

Marr, Ana. 2006. The Limitations of Group-Based Microfinance andWays to Overcome Them. Small Enterprise Development 17(3): 28–40.

Murray, Jessica and Richard Rosenberg. 2006. Community-Managed LoanFunds: Which Ones Work? Small Enterprise Development 17(3): 13–27.

Qudrat-I Elahi, Khandakar and M. Lutfor Rahman. 2006. Microcredit andMicrofinance: Functional and Conceptual Differences. Development inPractice 16(5): 476–483.

Ramakrishnappa, V. and R. Jagannatha Rao. 2006. Emerging MicrofinanceIssues in Dairy Development: A Case Study from Karnataka, India. IJARGE5(4): 399–412.

Roy, Marc-André and David Wheeler. 2006. A Survey of Micro-Enterprisein Urban West Africa: Drivers Shaping the Sector. Development in Practice16(5): 452–464.

Tesoriero, Frank. 2006. Strengthening Communities Through Women’sSelf Help Groups in South India. Community Development Journal 41(3):321–333.

Wharton School of the University of Pennsylvania. 2006. Microfinanceat a Crossroads: How Best to Create Value for the World’s Poorest Citizens.Knowledge@Wharton. Journal online. 18 October.

FINANCE for the poor

SELECTED PUBLICATIONS ON MICROFINANCEOTHER PUBLICATIONSBarua, Proloy, and Munshi Sulaiman. 2006. Targeting the Poorestin Microfinance: Poverty Outreach of BDP Ultra Poor Programme.Programme. Bangladesh: BRAC Research and Evaluation Division.Canada: Aga Khan Foundation Canada.

Consultative Group to Assist the Poor (CGAP). 2006. SubsidizedReinsurance as an Option for Micro Health Insurance Units? Micro-insurance: Improving Risk Management for the Poor. Washington, DC:CGAP Working Group on Microinsurance.

Crabb, Peter. 2006. Economic Freedom and the Success of MicrofinanceInstitutions. Indianapolis: Northwest Nazarene University-Business andEconomics.

Deshpande, Rani. 2006. Safe and Accessible: Bringing Poor Savers intothe Formal Financial System. CGAP Focus Note 37. Washington, DC:CGAP.

Dunford, Christopher. 2006. Evidence Of Microfinance’s Contributionto Achieving The Millennium Development Goals. Canada: GlobalMicrocredit Summit.

Fuller, Rob. 2006. Measuring Poverty of Microfinance Clients in Haiti.Washington, DC: Grameen Foundation USA.

Grameen Foundation. 2006. Thinking About Microfinance through aCommercial Lens. Washington, DC: Grameen Foundation USA.

Hazarika, Gautam. 2006. Household Access to Microcredit and ChildWork in Rural Malawi. Baton Rouge, LA: Louisiana State University.

Latifee, H.I. 2006. The Future of Microfinance: Visioning the Who, What,When, Where, Why, and How of Microfinance Expansion Over the Next10 Years. Microcredit Summit Campaign Commissioned Papers.Washington, DC: Microcredit Summit Campaign.

Littlefield, Elizabeth, Brigit Helms, and David Porteus. 2006. FinancialInclusion 2015: Four Scenarios for the Future of Microfinance. CGAPFocus Note 39. Washington, DC: CGAP.

Lyman, Timothy, Gautam Ivatury, and Stefan Staschen. 2006. Use ofAgents in Branchless Banking for the Poor: Rewards, Risks, and Regulation.CGAP Focus Note 38. Washington, DC: CGAP.

Mcguinness, Elizabeth, and Volodymyr Tounytsky. 2006. The Demandfor Microinsurance in Pakistan. Washington, DC: MicrofinanceOpportunities.

Morduch, Jonathan, Robert Cull, and Asli Demirguc-Kunt. 2006. FinancialPerformance and Outreach: A Global Analysis of Leading Microbanks.World Bank Policy Research Working Paper 3827. Washington, DC: WorldBank.

Radcliffe, Dantel, and Rati Tripathi. 2006. Sharpening the Debate: Assessingthe Key Constraints in Indian Micro Credit Regulation. Working Paper

Series (draft). Center for Micro Finance Institute for Financial Managementand Research.

Rhyne, Elisabeth, and Maria Otero. 2006. Microfinance through the NextDecade: Visioning the Who, What, Where, When, and How. MicrocreditSummit Campaign Commissioned Papers. Washington, DC: MicrocreditSummit Campaign.

Schreiner, Mark. 2006. Simple Poverty Progress Indices for Bangladesh,Haiti, India, Mexico, Pakistan and the Philippines. Washington, DC:Grameen Foundation USA.

Todd, Helen. 2006. Poverty Reduced Through Microfinance: The Impactof ASHI in the Philippines. Washington, DC: AIMS.

Wendt, Henry, and Robert Eichfeld. 2006. Building on Success: The NextChallenges for Microfinance. American Enterprise Institute for PublicPolicy Research. Development Policy Outlook Series. Washington, DC:Grameen Foundation USA.

Westly, Glenn D. 2006. Strategies and Structures for Commercial Banksin Microfinance. Washington, DC: Inter-American Development Bank.

New Publication from ADBRural Finance in the Lao People’s DemocraticRepublic: Demand, Supply, and Sustainability

Based on a 2004 national survey of nearly 1,200 rural house-holds, commercial banks, and known microfinance initiativesin the Lao People’s Democratic Republic (Lao PDR), this bookprovides a comprehensive overview of rural finance in Lao PDR.The study finds that the formal sector (banks) and semiformalsector (microfinance initiatives) are not meeting the demand forfinancial services of the vast majority of rural households.However, the study notes that the Government’s new market-oriented policy has the potential to have a significant positiveimpact on sector development.