publication . Book . Research . 2017

Seasonality of Rural Finance

Hussain A. Samad; Shahidur R. Khandker; Syed Badruddoza;
Open Access
  • Published: 01 Feb 2017
  • Publisher: World Bank, Washington, DC
  • Country: United States
Abstract
Simultaneity of borrowing, withdrawal of savings, and loan defaults due to the pronounced seasonality of agriculture often leads to investment failure of rural financial institutions. Lack of borrowing leads to lack of in-come- and consumption-smoothing, and in turn, causes inefficient resource allocation by rural households. Financial institutions that are active in rural areas take different measures to address the covariate risks in intermediation. For example, microfinance institutions have sought various measures such as supporting non-farm activities to diversify income, introducing seasonal loans, and bringing flexibility in loan repayments to reduce non-...
Subjects
free text keywords: rural finance, seasonality, crop cycles, lean seasons, investment decisions, risk, financial intermediation, Consumption smoothing, Financial intermediary, Rural economics, Finance, business.industry, business, Rural area, Financial inclusion, Loan, Per capita income, Microfinance, law.invention, law
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