Rural finance institutions / governance

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Reaching Rural Areas with Financial Services: Lessons from Financial Cooperatives in Brazil, Burkina Faso, Kenya, and Sri Lanka

Agriculture and Rural Development Discussion Paper 35, The World Bank (2004)

This paper presents four cases of financial cooperative networks that have a significant rural outreach and attempts to draw some lessons from their performance, regulatory and supervisory environments they operate in, and their business models. The networks operate in countries that differ widely in historic and cultural contexts, levels of economic and human development, legal and regulatory environment, and competition they face. Key lessons drawn by the paper are: a) financial cooperatives can provide financial services in rural areas in developing countries and still be profitable; b) a regulatory framework that includes prudential regulations and a supervisory arrangement with financial supervision capabilities is correlated with better performance; and c) financial cooperatives that are closely integrated provide a broader range of financial services, have more advanced operational systems, and appear to be more financially sustainable than those that are loosely integrated.

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