Document Type


Publication Date

Spring 2000


We construct, using methods advocated in one strand of the Financial Systems Approach literature, a reform-and-renewal program for one of Ghana’s struggling Rural Banks--the Kaaseman Rural Bank. Questionnaire results, local informal financial practices, recent institutional innovations in Ghanaian finance, the experiences of successful “Nontraditional” rural finance institutions in developing countries, and the operating structure of the Rural Bank program indicate that this bank can implement a group-lending scheme that will reduce significantly its transaction costs and those of its customers. We thus demonstrate how the Financial Systems Approach can be employed to promote sustainable rural financial intermediation in a specific socioeconomic and institutional setting. The potential for our reform proposals to succeed in the local Ghanaian context is analyzed carefully.


This article first appeared in the Spring 2000 issue of Journal of Sustainable Development in Africa, a magazine of Clarion University of Pennsylvania, and is reprinted with permission.

©2000 Clarion University of Pennsylvania