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Rural Financial Markets in Argentina: Access to Financial Services and Institutional Performance
Schreiner, M.
Publication Date: 1997
Published by: Microfinance Risk Management & Center for Social Development, Washington University in St. Louis
Document Type: Paper
Bringing efficiency in rural financial market
This paper examines rural financial markets in Argentina. The author states that agriculture is an important sector in Argentina's economy and rural financial markets are critical to sustained economic growth as:
- Financial services facilitate more efficient production and consumption by rural households;
- Financial services facilitate accumulation of assets and provide an outlet from poverty, which is deep and wide in Argentina;
- Agricultural cash-flows are mismatched creating a strong need for financial services;
- While sustained growth requires increased domestic savings, rural households have limited access to saving services.
This paper analyses how the interaction of demand and supply create or fail to create financial services. It examines:
- Costs and quality issues in the provision of financial services;
- Material conditions influencing small, rural producers;
- Patterns of cash flows that affect demand for financial services;
- Retail supply of financial services.
The paper also analyses demands of small, rural producers for financial services that are not matched by supplies, as an unmatched demand for credit leads to the loss of profitable opportunities due to lack of resources.
The paper argues that efficient markets need efficient institutions and a healthy, stable macro-economy. Finally, it identifies possible modifications to the institutional and macroeconomic environment which would increase the ability and willingness of the suppliers of financial services to meet the demand of small, rural households.
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