Expansion of Rural Financial Services: The Development of a Community-based Rural Credit Union Network in the Dominican Republic (1984-1993)

Between 1983 and 1992, the United States Agency for International Development (USAID) financed two projects designed to strengthen institutions that provide financial services to the rural population in the Dominican Republic, of which the most innovative components of these project was the strengthening of rural credit unions.Although USAID, as well as other international donor organizations, have supported the development of credit unions in the Dominican Republic for the past twenty years, ironically the supply-leading nature of this support has consistently undermined its financial viability.In examining the situation of rural credit unions in the Dominican Republic, the paper outlines the brief history and evolution of the credit union system, goes on to examine the recent macroeconomic developments, the role of these institutions in these markets, the strategy employed for institutional strengthening of rural credit unions, the financial performance of the credit unions that participated in the institutional strengthening project, the second tier association created by the credit unions, and the regulatory structure.