Assessment of rural financial markets in Honduras

In this study, nine researchers document the major factors affecting the performance of rural financial market institutions and programs in Honduras. The report"s first three chapters provide a macroeconomic perspective. The Honduran economy as a whole and the performance of its financial sector during the past two decades are reviewed, and trends in the global supply of agricultural credit and the relative performance of various institutional channels for rural credit are described. Next, the evolution of the Agricultural Development Bank"s (BANADESA) loan portfolio and the bank"s changing role in the rural credit scene are reviewed; BANADESA"s lending costs and loan repayment experience are also considered. Subsequent chapters discuss savings mobilization in Honduras and report in detail the findings of an extensive 1981 farm credit survey. Following this, credit supervision by Honduran rural credit institutions is reviewed and a study of the role of credit in the recently formed agrarian reform asentamientos is presented. The report"s final chapters analyze pricing policies and price incentives for crop agriculture and report on a field study of rural credit unions in Honduras; the potential for these credit unions to mobilize savings and to serve the credit needs of small farmers is noted. The authors conclude that a severe shortage of agricultural credit exists in Honduras. Detailed recommendations for measures to increase the supply of credit are provided. Extensive statistical data are included in the report.