Performance of institutional finance for agricultural development

Abstract

This article analyses the performance of rural institutional finance system and draws implication for improving his performance. It is seen that while the long run performance of the rural institutional finance system has been good short run growth rates display a desperate performance. Moreover, this system has performed better in deposit mobilisation 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.