India’s Rural Financial System: Does it Support Pro-Poor Innovation?

Sonne, Lina (2010). India’s Rural Financial System: Does it Support Pro-Poor Innovation?. UNU-MERIT.

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  • Author Sonne, Lina
    Title India’s Rural Financial System: Does it Support Pro-Poor Innovation?
    Publication Date 2010
    Publisher UNU-MERIT
    Abstract From the perspective of poverty alleviation, socially relevant, or pro-poor, rural innovation is of particular interest in a country like India since it is in rural areas that most of the poor live. Pro-poor innovation in rural areas is more likely to occur through small-scale ventures and entrepreneurs than industrial research and development. The Indian banking system does not efficiently support such rural pro-poor entrepreneur-based innovation. Instead a pioneering alternative financing sector has been emerging recently. There are three broad categories of organisations in this sector: grassroots innovators and incubators, micro venture capital firms, and small-scale financiers beyond microfinance. This paper considers why the core of India’s financial system, its banking sector, does not support rural entrepreneur-based innovation. It ends by discussing the emerging alternative financing sector at the periphery which on the other hand appears able to do so.
    Keyword Pro-poor finance
    Finance innovation
    Finance entrepreneurship
    Financial innovation
    Rural finance
    India
    India’s financial system
    JEL G21
    O16
    O31
    R51
    Copyright Holder UNU-MERIT
    Copyright Year 2010
    ISSN 1871-9872
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    Created: Wed, 11 Dec 2013, 16:48:17 JST