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This report examines impact of changing financial markets on rural capital availability. Rural markets are assumed to have certain characteristics affecting capital flows: lack of economic diversification, higher risk lending opportunities, higher transactions costs associated with lending, and relatively small institutions with limited management capacity.
Options of Rural Capital availability include public initiatives (direct/indirect lending programs, regulatory authority), Private Initiatives (community development, technical assistance), Public-Private Partnership initiatives ( Capital Access Programs, Industrial Development programs, Community reinvestment funds) Policy Recommendations include 1)determining the status of Rural Capital Markets, 2) Establishing An Appropriate role for the state (state fund, local reserve programs); 3) Use of State Regulatory Authority; 4) Providing Technical Assistance; 5) Promotion of capital market solutions (filling capital gaps through venture capital funds, bank CDCs, community development credits unions).
