This Working Paper is one of several prepared as part of a study of the role of monetary policy in primary product-dependent, low-income countries. The objective of the study is to examine what monetary policy can be expected to accomplish and the principal constraints upon its effectiveness. Six country studies (Bangladesh, China, Cote d'Ivoire, Ghana, Indonesia and Kenya) examine the development of monetary institutions, the determination of money supply and demand, and the objectives and experience of governments in implementing monetary policy in individual countries.

The paper shows that there has been a considerable amount of research on the characteristics of small borrowers and the different credit institutions in the informal financial sector (IFS) that provide the bulk of what credit they get and the limited channels for mobilising their savings. It may now be time for the emphasis in future studies to focus on the examination of potential linkages between small borrowers and the formal financial sector (FFS).