Overcoming Obstacles to Agricultural Microfinance

Flashcards covering key concepts related to agricultural microfinance and its challenges.

Microfinance

Financial services provided to low-income clients or those not served by traditional banks.

Agricultural Microfinance

Financial services specifically tailored for agricultural activities, focusing on smallholder farmers.

Collateral

An asset that a borrower offers to a lender as a guarantee for a loan.

Information Asymmetry

A situation where one party has more or better information than the other in a transaction.

Covariant Risks

Risks that affect a large number of borrowers simultaneously, often due to external factors like weather or market prices.

Risk Management Strategies

Techniques used to identify, assess, and prioritize risks, followed by coordinated efforts to minimize or control the probability of unfortunate events.

Subsidized Agricultural Credit

Loans offered at below-market interest rates to encourage farmers to adopt certain practices or technologies.

NGOs (Non-Governmental Organizations)

Organizations that operate independently from the government, often focusing on social issues, including microfinance.

Heterogeneity of the Population

The presence of diverse characteristics within a population, influencing economic behaviors and needs.

Market-Based Risk Management Products

Financial instruments designed to protect against risks that arise from market fluctuations.

Informal Credit Sources

Loans obtained from non-institutional lenders, like family, friends, or local moneylenders.

Financial Inclusion

The process of ensuring access to financial services for all individuals, particularly marginalized groups.

Lending Technology

The methods and systems used by lenders to assess and manage loans and borrowers.

Product Design

The creation and development of financial products tailored to meet the specific needs of a target market.

Rural Lenders

Financial institutions or individuals who provide loans to borrowers in rural areas, often for agricultural purposes.