Redistribution in Reverse: Cheap Credit Cannot Redistribute Income in Favor of the Small Farmer

摘要

Do the low interest rates charged by formal financial institutions (FFI) in low-income countries effectively redistribute income. Pointing to the limited access of borrowers to FFI credit and FFI's highly concentrated loan portfolios (3% of agricultural producers in low-income countries have access to 80% of the credit), this discussion paper explores the direct and indirect effects of low interest rates on rural borrowers and argues that such rates actually promote the concentration of wealth.