Performance of institutional finance for agricultural development

Abstract

This paper analyses the performance of rural institutional finance system and based on that draw implication for improving this performance. Section II provides a conceptualization of performance criteria. Section III discusses the results. And Section IV recapitulates main conclusions and implication. Main conclusions are that the rural institutional finance system has performed well but only considering long run performance. Short run growth rates display a disparate performance. Moreover, this system has performed better in deposit mobilization than in financing agricultural output and investment. Its performance on the functional structure of loans and loan recovery leaves much to be desired. Despite this, the RFIs are viable and have not suffered from scale diseconomies in their transaction costs. Similarly, agricultural productivity and investment have increased with the increase in various functions of the rural institutional finance system.