Mobilizing private sector resources through commercial banks

Implementation

Commercial bank lending in developing countries has tended to cluster in urban conglomerations and concentrate on funding large farming enterprises, consumer-based industries and the foreign-trade sector.

Counter-claim

It is clear that formal financial institutions are suited to meet the demand for large and long-term credit because of their reliance upon the pooling of funds from deposits and maturity transformation, and because they can also exploit economies of scale and of scope in their operations. Their structure is conducive to meeting the financial needs of larger industrial and commercial units, as well as those of affluent households, but they are not suitable for providing financial services to small farmers, small-scale entrepreneurs and the poor.