Case Study

Innovations in Rural and Agricultural Finance in Moldova

Overcoming the challenges of improving access to financial services for rural communities
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This case study analyzes the innovations and performance of bank and non-bank financial institutions sustainably expanding access to demand-driven rural and agricultural financial (RAF) services in Moldova during the last five years (December 1999-September 2004). The case study assesses retailing of rural financial services (non-farm and agricultural) by Moldova Agroindbank (Agroindbank), Savings and Credit Associations (SCAs), the Rural Finance Corporation (RFC) and wholesaling of funds by Agroindbank and RFC to the SCAs and considers improvements in the operating environment that have facilitated expansion of RAF services. Further, the case study lists out some of the main constraints to RAF market operations:

  • For the ultimate clients: Lack of access to RAF;
  • For RAF providers: Inadequate capacity to overcome high information and transaction costs;
  • For the Government: Providing adequate support to RAF market functioning;
  • For donors: Striking the optimal balance of mission programs aimed at developing the agricultural and financial sectors.

The study concludes:

  • Access to financial services is an important component of rural and agricultural development projects;
  • Existence of adequate support services are preconditions to an efficiently functioning RAF system.

About this Publication

By Charitonenko, S. & Bantug-Herrera, A.
Published