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Community-based Financial Organizations: A Solution to Access in Remote Rural Areas?

This paper reviews the evidence to date on the sustainability of CBFOs, with a view toward determining whether they are a viable option for the provision

of financial services to the rural poor who live in sparsely populated rural areas. CBFOs can be defined as autonomous organizations owned and

managed by members of a particular community. They differ from the “village banks” in Latin America and the “solidarity groups” in countries such as

Bangladesh in that such groups are usually not autonomous; they have been set up by MFIs as a cost-effective way to provide services to the poor.The objective of the paper is to provide claritys on whether, and how, such entities can be part of a strategy for the economic development of the poor living in rural areas who are not
well-served by financial institutions.

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