Subsidies as an instrument in agriculture finance: a review
Providing sustainable financial services for rural areas and agriculture in developing countries has proven to be difficult in spite of recent reforms and billions of dollars spent in subsidizing programs to develop financial institutions. This paper presents a literature review of the lessons learned in the use of subsidies and investments as instruments of agricultural development finance. The emphasis is largely on agricultural credit, primarily for small farmers. Because of time limitations, this paper does not include the rapidly expanding literature on value chain finance. The paper is intended for decision makers in developing countries as well as staff in international agencies, nongovernmental organizations, and other organizations interested in supplying financial services for poor farm and nonfarm households in rural areas.