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Publication Detail
WD 1993-01: Differences in Uses of Rural Financial Markets in Taiwan and the Philippines

The study examines the reasons why Taiwan and the Philippines were quite dissimilar in the early 1990s, whereas they had many similarities, after KMT rule and American presence respectively, in 1945. Argues that Taiwan introduced land reform and used its formal rural financial markets more effectively than the Philippines did. This explains an important part of the superior economic performance in Taiwan. The Philippines used financial markets to handle targeted loans and subsidies while Taiwan mostly used these markets to support the efficient allocation of resources. The author compares rural financial markets in Taiwan and the Philippines, and finds reasons for the superiority of Taiwanese market: * Taiwan kept real rates of interest on deposits almost always positive, * Rural deposits allowed Taiwan to decrease government intervention in agricultural finance, * Taiwan could keep rent-seekers and corruption at a distance from agricultural credit market, * Dispersed network in Taiwan allowed lenders to maintain low transaction costs because they had to do little reporting to higher authorities.

PinoyME Foundation
Authors Keywords
Lamberte, Mario B.; Adams, Dale W.; Chen, H.Y.; microfinance; rural finance;
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Published in 1993 and available in the Science Direct Website or can be downloaded as full text Downloaded 897 times since November 25, 2011