Increasing Access to Rural Finance in Bangladesh : The Forgotten "Missing Middle"

Increasing access to rural finance is often the last frontier for financial sector development in developing countries. Financial institutions aiming to operate in rural areas in these countries usually have to deal with high transaction costs, low...

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Bibliographic Details
Main Author:	Ferrari, Aurora
Format:	Publication
Language:	English en_US
Published:	Washington, DC: World Bank 2012
Subjects:	ACCESS INDICATORS ACCESS TO CREDIT ACCESS TO FINANCE ACCESS TO FINANCIAL SERVICES ACCESS TO FORMAL CREDIT ACCESS TO INSURANCE ACCESS TO RURAL FINANCE ACCOUNTING ACCOUNTING STANDARDS AGRICULTURAL ACTIVITIES AGRICULTURAL CREDIT APPLICATION PROCESS APPLICATION PROCESSES AUDITING AUDITORS BALANCE SHEET BALANCE SHEETS BANK ASSETS BANK BRANCH BANK BRANCHES BANK CHARGES BANK CREDIT BANK DEPOSITS MICROFINANCE MICROFINANCE INSTITUTION MICROFINANCE INSTITUTIONS MICROFINANCE LENDING MINORITY SHAREHOLDERS MOVABLE COLLATERAL NATURAL DISASTERS NONPERFORMING LOANS OPERATING COSTS OPERATING EXPENSES OPERATING LOSSES OUTSTANDING LOANS PRIVATE BANKS PRIVATE COMMERCIAL BANKS PRIVATE CREDIT PRIVATE FINANCIAL INSTITUTIONS PROFIT MARGINS PROFITABILITY PROFITABILITY MEASURES RECAPITALIZATION REGULATORY FRAMEWORK REMITTANCES REPAYMENT REPAYMENT CAPACITY REPAYMENTS RETAIL BUSINESS RETAINED EARNINGS RETURN ON EQUITY RETURNS REVOLVING LOAN RISK MANAGEMENT RURAL ACCESS RURAL BANK RURAL BANK BRANCH RURAL BANKING RURAL BANKS RURAL BRANCH RURAL BRANCHES RURAL CREDIT RURAL FINANCIAL SERVICES RURAL LOAN RURAL LOANS SAVINGS SECURITY INTERESTS SMALL BUSINESS SMALL BUSINESS LENDING SMALL BUSINESSES SMALL ENTERPRISE SMALL ENTERPRISES SMALL FARMERS SMALL LOANS SOURCES OF CREDIT SOURCES OF FINANCE STATE BANKS SUBSIDIARY TECHNICAL ASSISTANCE TERMS OF LOAN TRANSACTION TRANSACTION COSTS TRANSPORT URBAN AREAS VOLATILE INCOMES WORKING CAPITAL
Online Access:	http://documents.worldbank.org/curated/en/2007/07/8713591/increasing-access-rural-finance-bangladesh-forgotten-missing-middle http://hdl.handle.net/10986/6832

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Summary:	Increasing access to rural finance is often the last frontier for financial sector development in developing countries. Financial institutions aiming to operate in rural areas in these countries usually have to deal with high transaction costs, low population densities, remote areas, and a heavy focus on agriculture, with related weather and commodity risks. Although Bangladesh is highly vulnerable to natural disasters, its high population density lowers transaction costs considerably. This report seeks to: measure the quantity and quality of access to finance by rural micro, small, and medium-size enterprises (MSMEs) and marginal, small, and medium-size farmesr (MSMFs). In Bangladesh these are also referred to as the missing middle -- a segment not served by banks or microfinance institutions (MFIs). The report also identifies constraints that financial institutions face in serving MSMEs and MSMFs. The institutions analyzed in detail include, Bangladesh Krishi Bank (BKB), Rajshahi Krishi Unnayan Bank (RAKUB), MFIs, private banks, and insurance companies. These institutions have been selected because they are among the largest providers of finance to the missing middle. Moreover, given their size, they have a considerable impact on the current dysfunction of rural financial markets. The report finally develops a realistic strategy and options for sustainably increasing access to finance for the missing middle.

Increasing Access to Rural Finance in Bangladesh : The Forgotten "Missing Middle"

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