Rural finance for food security for the poor: implications for research and policy

Examines the potential for improving household food security by providing access to financial services. The study is based on a review of theory at household and institutional levels, empirical evidence on the borrowing and saving behavior of the rural poor, and on the experiences of selected innovative financial institutions in developing countries. According to its conceptual framework, financial services could help prevent both transitory and chronic food insecurity. First, by providing access to credit, savings, and insurance services, households could acquire inputs, labor, and equipment to generate additional income. Second, access to financial services could increase their capacity to bear risk, enabling them to invest in new agricultural technology and off-farm enterprises. Third, improved access to financial services could help stabilize consumption.