tailieunhanh - TYPES AND ROLES OF FORMAL FINANCIAL INSTITUTIONS PROVIDING AGRICULTURAL CREDIT

Traditional macroeconomic models without financial intermediation describe the transmission mechanism of monetary policy through a single (risk-free) interest rate. As indicated by Meltzer and Nelson 1 , the characterisation of the financial sector in such a simplified manner is likely to miss important elements in the macroeconomic adjustment mechanisms. A key aspect that is absent from the traditional framework is an account of how different interest rates embody time-varying risk premia. Developments in money and credit may be informative as regards the evolution of the (unobservable) risk premia, both for the bank and for the non-financial private sector | SECTION 3 TYPES AND ROLES OF FORMAL FINANCIAL INSTITUTIONS PROVIDING AGRICULTURAL CREDIT Objective Present the different types of financial intermediaries operating in the agricultural sector of Developing Countries with a specific accent on their institutional roles typical performances and effectiveness in servicing the agricultural customer. Contents Introduction financial intermediaries and financial markets Public power of Monetary Authorities in the formal market and the agricultural sector The formal financial market and agricultural credit Commercial Banks Savings Banks Co-operative Banks Development Banks Types of contracts offered in the formal market Islamic Banking Appendix The Bank s Financial Statements . The Balance Sheet . The Income and Expense Account References Practical illustration analysis of the structure of the country s financial market Application exercise discussion on the Durang case study Agricultural Training Manual 1 Section 3 TYPES AND ROLES OF FORMAL FINANCIAL INSTITUTIONS PROVIDING AGRICULTURAL CREDIT1 Introduction financial intermediaries and financial markets Financial intermediaries have traditionally been divided into different categories according to specific characteristics as concerns their institutional setting the range of intervention their organisation and services provided. Different bank classes can be found both in industrialised economies and in developing countries the distinction among commercial banks savings banks or development banks for instance is still very common. However in some countries this classification is becoming less significant particularly on the operational side because the evolution of the regulatory framework and the increasing competition led many banks to enlarge their fields of intervention. In some countries the distinction is still applicable. Despite the process of homogenisation of bank classes an analysis of the typical goals