Rural development and rural finance: the role of financial services cooperatives in the Latin America region

Theme: TOPIC 15 – STAGE 4 - MACRO Over recent decades rural finance development has become a major topic in political agendas across the globe. This is mainly due to the positive correlation between rural finance and rural... [ view full abstract ]

Theme: TOPIC 15 – STAGE 4 - MACRO

Over recent decades rural finance development has become a major topic in political agendas across the globe. This is mainly due to the positive correlation between rural finance and rural development; not only to fight against poverty but also for generating economic growth. The new rural finance paradigm emphasises finance as a way to expand outreach to rural areas and it requires specific government initiatives.

In the case of Latin America, where the 22% of its population lives in rural areas, the rural development approach based on the new rurality paradigm requires innovative ways of thinking about development from a multi-sectoral and diversified perspective in order to meet the populations’ needs, facilitate agricultural modernization, and provide viable business alternatives. Reaching these objectives entails efficient rural financial markets. Despite the substantial financial deregulation in larger financial systems, the market failure remains persistent in the region. This work proposes a study of rural finance policy initiatives in several Latin American countries in order to position cooperatives as an effective and alternative financial service provider.

Key Words: rural development; financial systems; financial cooperatives; Latin America; public policies, rural finance.