In 2005, the Fondo de Desarrollo Local (FDL) gained the international Inter-American Development Bank (IADB) prize for the best non-regulated microfinance institution in Latin America. A year later, in 2006, the Central American Bank for Economic Integration (BCIE) selected the FDL from 78 Central American MFIs as the winner of its Award for Excellence in Microfinance Management. Its leadership in the Latin American Rural Microfinance Association (FOROLAC), its exceptional outreach to rural producers and its development orientation, coupled with entrepreneurial viability and extraordinary sustainability, contributed with these recognitions. Nevertheless, analysing the incentives and pressures emanating from the current mainstreaming microfinance paradigm, this article expresses deep concerns about the anti-rural and anti-agricultural bias of international microfinance policies and the negative effects that they engender for the further growth of microfinance for a more dynamic and socially inclusive agricultural development in Latin America.

Bastiaensen, J. (2000) ‘Institutional entrepreneurship for rural development: The Nitlapán banking network in Nicaragua’, in R. Ruben and J. Bastiaensen (eds) Rural development in Central America, pp. 151-170, Macmillan, Houdsmill.

Bastiaensen, J. (ed.) (2002) Crédito para el desarrollo rural en Nicaragua: un enfoque institucional sobre la experiencia del Fondo de Desarrollo Local, Nitlapán, Managua.

Boucher, S., Barham, B. and Carter, M. (2005) ‘The impact of “marketfriendly” reforms on credit and land markets in Honduras and Nicaragua’, World Development 33 (1): 107-128.

CGAP (2004) Building Inclusive Financial Systems, Donor Guidelines on Good Practice in Microfinance, CGAP/The World Bank, Washington DC.

Flaming, M., Duflos, E., Helms, B., Siedek, H., Summerlin, R. and Duarte, S. (2005) Nicaragua. Country Level Effectiveness and Accountability Review, CGAP, Washington DC.

Gonzalez-Vega, C. (1984) ‘Credit-rationing behavior of agricultural lenders: The iron law of interest rate restrictions’, in D. Adams, W. Graham and J. D. Von Pischke (eds) Undermining Rural Development with Cheap Credit, pp. 78-95, Westview Press, Boulder, CO.

Gonzalez-Vega, C. (2003) Deepening Rural Financial Markets: Macro-economic Policy and Political Dimensions, paper presented at ‘Paving the Way Forward for Rural Finance. An International Conference on Best Practices’, Washington DC.

Gonzalez-Vega, C., Lardé de Palomo, L. M., Jímenez, R., Quirós, R., Alvardo, J., Galarza, F. and Cajavilca, J. (2004) ‘The economic, legal and regulatory environment: Deepening rural financial markets’, in M. Wenner, J. Alvarado and F. Galarza (eds) Promising Practices in Rural Finance: Experiences from Latin America and the Caribbean, pp. 67-176, Sustainable Development Department, IADB, Washington DC.

Harper, M. (2005) ‘Farm credit and microfinance: Is there a critical mismatch?’, Small Enterprise Development 16 (3): 58-67.

Helms, B. (2006) Access for All. Building Inclusive Financial Systems, CGAP/World Bank, Washington DC.

IDB (2001) Rural Financial Strategy, Sustainable Development Department, Sector Strategy and Policy Paper Series, IADB, Washington DC.

Jansen, S. (2004) Measuring the Impact of Microfinance: The Case of Financiera Calpía, GTZ, Abteiling 41, Finanzsystementwicklung, El Salvador and Eschbron.

Marchetti, P. (1996) ‘The anti-rural production bias in the Nicaraguan Financial Reform’, Nitlapán.

Morduch, J. (2000) ‘The microfinance schism’, World Development 28 (4): 617-629.

Nagarajan, G. and Meyer, R. (2005) Rural Finance: Recent Advances and Emerging Lessons, Debates, and Opportunities, Working Paper AEDE-WP-0041-05, Department of Agricultural, Environmental and Development Economics, Ohio State University, Columbus, Ohio.

Navajas, S. and Gonzalez-Vega, C. (2004) ‘Financiera Calpia, El Salvador: Innovative approaches to rural lending’, in M. Wenner, J. Alvarado and F. Galarza (eds) Promising Practices in Rural Finance: Experiences from Latin America and the Caribbean, pp. 177-211, Sustainable Development Department, IADB, Washington DC.

SIBOIF (2001) Norma Prudencial sobre Evaluación y Clasificación de Activos, CD-SIB-185-2-NOV9-2001, Superintendencia de Bancos y Otras Instituciones Financieras, Managua.

Bastiaensen, J. (2000) ‘Institutional entrepreneurship for rural development: The Nitlapán banking network in Nicaragua’, in R. Ruben and J. Bastiaensen (eds) Rural development in Central America, pp. 151-170, Macmillan, Houdsmill.

Bastiaensen, J. (ed.) (2002) Crédito para el desarrollo rural en Nicaragua: un enfoque institucional sobre la experiencia del Fondo de Desarrollo Local, Nitlapán, Managua.

Boucher, S., Barham, B. and Carter, M. (2005) ‘The impact of “marketfriendly” reforms on credit and land markets in Honduras and Nicaragua’, World Development 33 (1): 107-128.

CGAP (2004) Building Inclusive Financial Systems, Donor Guidelines on Good Practice in Microfinance, CGAP/The World Bank, Washington DC.

Flaming, M., Duflos, E., Helms, B., Siedek, H., Summerlin, R. and Duarte, S. (2005) Nicaragua. Country Level Effectiveness and Accountability Review, CGAP, Washington DC.

Gonzalez-Vega, C. (1984) ‘Credit-rationing behavior of agricultural lenders: The iron law of interest rate restrictions’, in D. Adams, W. Graham and J. D. Von Pischke (eds) Undermining Rural Development with Cheap Credit, pp. 78-95, Westview Press, Boulder, CO.

Gonzalez-Vega, C. (2003) Deepening Rural Financial Markets: Macro-economic Policy and Political Dimensions, paper presented at ‘Paving the Way Forward for Rural Finance. An International Conference on Best Practices’, Washington DC.

Gonzalez-Vega, C., Lardé de Palomo, L. M., Jímenez, R., Quirós, R., Alvardo, J., Galarza, F. and Cajavilca, J. (2004) ‘The economic, legal and regulatory environment: Deepening rural financial markets’, in M. Wenner, J. Alvarado and F. Galarza (eds) Promising Practices in Rural Finance: Experiences from Latin America and the Caribbean, pp. 67-176, Sustainable Development Department, IADB, Washington DC.

Harper, M. (2005) ‘Farm credit and microfinance: Is there a critical mismatch?’, Small Enterprise Development 16 (3): 58-67.

Helms, B. (2006) Access for All. Building Inclusive Financial Systems, CGAP/World Bank, Washington DC.

IDB (2001) Rural Financial Strategy, Sustainable Development Department, Sector Strategy and Policy Paper Series, IADB, Washington DC.

Jansen, S. (2004) Measuring the Impact of Microfinance: The Case of Financiera Calpía, GTZ, Abteiling 41, Finanzsystementwicklung, El Salvador and Eschbron.

Marchetti, P. (1996) ‘The anti-rural production bias in the Nicaraguan Financial Reform’, Nitlapán.

Morduch, J. (2000) ‘The microfinance schism’, World Development 28 (4): 617-629.

Nagarajan, G. and Meyer, R. (2005) Rural Finance: Recent Advances and Emerging Lessons, Debates, and Opportunities, Working Paper AEDE-WP-0041-05, Department of Agricultural, Environmental and Development Economics, Ohio State University, Columbus, Ohio.

Navajas, S. and Gonzalez-Vega, C. (2004) ‘Financiera Calpia, El Salvador: Innovative approaches to rural lending’, in M. Wenner, J. Alvarado and F. Galarza (eds) Promising Practices in Rural Finance: Experiences from Latin America and the Caribbean, pp. 177-211, Sustainable Development Department, IADB, Washington DC.

SIBOIF (2001) Norma Prudencial sobre Evaluación y Clasificación de Activos, CD-SIB-185-2-NOV9-2001, Superintendencia de Bancos y Otras Instituciones Financieras, Managua.

Bastiaensen, J. (2000) ‘Institutional entrepreneurship for rural development: The Nitlapán banking network in Nicaragua’, in R. Ruben and J. Bastiaensen (eds) Rural development in Central America, pp. 151-170, Macmillan, Houdsmill.

Bastiaensen, J. (ed.) (2002) Crédito para el desarrollo rural en Nicaragua: un enfoque institucional sobre la experiencia del Fondo de Desarrollo Local, Nitlapán, Managua.

Boucher, S., Barham, B. and Carter, M. (2005) ‘The impact of “marketfriendly” reforms on credit and land markets in Honduras and Nicaragua’, World Development 33 (1): 107-128.

CGAP (2004) Building Inclusive Financial Systems, Donor Guidelines on Good Practice in Microfinance, CGAP/The World Bank, Washington DC.

Flaming, M., Duflos, E., Helms, B., Siedek, H., Summerlin, R. and Duarte, S. (2005) Nicaragua. Country Level Effectiveness and Accountability Review, CGAP, Washington DC.

Gonzalez-Vega, C. (1984) ‘Credit-rationing behavior of agricultural lenders: The iron law of interest rate restrictions’, in D. Adams, W. Graham and J. D. Von Pischke (eds) Undermining Rural Development with Cheap Credit, pp. 78-95, Westview Press, Boulder, CO.

Gonzalez-Vega, C. (2003) Deepening Rural Financial Markets: Macro-economic Policy and Political Dimensions, paper presented at ‘Paving the Way Forward for Rural Finance. An International Conference on Best Practices’, Washington DC.

Gonzalez-Vega, C., Lardé de Palomo, L. M., Jímenez, R., Quirós, R., Alvardo, J., Galarza, F. and Cajavilca, J. (2004) ‘The economic, legal and regulatory environment: Deepening rural financial markets’, in M. Wenner, J. Alvarado and F. Galarza (eds) Promising Practices in Rural Finance: Experiences from Latin America and the Caribbean, pp. 67-176, Sustainable Development Department, IADB, Washington DC.

Harper, M. (2005) ‘Farm credit and microfinance: Is there a critical mismatch?’, Small Enterprise Development 16 (3): 58-67.

Helms, B. (2006) Access for All. Building Inclusive Financial Systems, CGAP/World Bank, Washington DC.

IDB (2001) Rural Financial Strategy, Sustainable Development Department, Sector Strategy and Policy Paper Series, IADB, Washington DC.

Jansen, S. (2004) Measuring the Impact of Microfinance: The Case of Financiera Calpía, GTZ, Abteiling 41, Finanzsystementwicklung, El Salvador and Eschbron.

Marchetti, P. (1996) ‘The anti-rural production bias in the Nicaraguan Financial Reform’, Nitlapán.

Morduch, J. (2000) ‘The microfinance schism’, World Development 28 (4): 617-629.

Nagarajan, G. and Meyer, R. (2005) Rural Finance: Recent Advances and Emerging Lessons, Debates, and Opportunities, Working Paper AEDE-WP-0041-05, Department of Agricultural, Environmental and Development Economics, Ohio State University, Columbus, Ohio.

Navajas, S. and Gonzalez-Vega, C. (2004) ‘Financiera Calpia, El Salvador: Innovative approaches to rural lending’, in M. Wenner, J. Alvarado and F. Galarza (eds) Promising Practices in Rural Finance: Experiences from Latin America and the Caribbean, pp. 177-211, Sustainable Development Department, IADB, Washington DC.

SIBOIF (2001) Norma Prudencial sobre Evaluación y Clasificación de Activos, CD-SIB-185-2-NOV9-2001, Superintendencia de Bancos y Otras Instituciones Financieras, Managua.

Bastiaensen, J. (2000) ‘Institutional entrepreneurship for rural development: The Nitlapán banking network in Nicaragua’, in R. Ruben and J. Bastiaensen (eds) Rural development in Central America, pp. 151-170, Macmillan, Houdsmill.

Bastiaensen, J. (ed.) (2002) Crédito para el desarrollo rural en Nicaragua: un enfoque institucional sobre la experiencia del Fondo de Desarrollo Local, Nitlapán, Managua.

Boucher, S., Barham, B. and Carter, M. (2005) ‘The impact of “marketfriendly” reforms on credit and land markets in Honduras and Nicaragua’, World Development 33 (1): 107-128.

CGAP (2004) Building Inclusive Financial Systems, Donor Guidelines on Good Practice in Microfinance, CGAP/The World Bank, Washington DC.

Flaming, M., Duflos, E., Helms, B., Siedek, H., Summerlin, R. and Duarte, S. (2005) Nicaragua. Country Level Effectiveness and Accountability Review, CGAP, Washington DC.

Gonzalez-Vega, C. (1984) ‘Credit-rationing behavior of agricultural lenders: The iron law of interest rate restrictions’, in D. Adams, W. Graham and J. D. Von Pischke (eds) Undermining Rural Development with Cheap Credit, pp. 78-95, Westview Press, Boulder, CO.

Gonzalez-Vega, C. (2003) Deepening Rural Financial Markets: Macro-economic Policy and Political Dimensions, paper presented at ‘Paving the Way Forward for Rural Finance. An International Conference on Best Practices’, Washington DC.

Gonzalez-Vega, C., Lardé de Palomo, L. M., Jímenez, R., Quirós, R., Alvardo, J., Galarza, F. and Cajavilca, J. (2004) ‘The economic, legal and regulatory environment: Deepening rural financial markets’, in M. Wenner, J. Alvarado and F. Galarza (eds) Promising Practices in Rural Finance: Experiences from Latin America and the Caribbean, pp. 67-176, Sustainable Development Department, IADB, Washington DC.

Harper, M. (2005) ‘Farm credit and microfinance: Is there a critical mismatch?’, Small Enterprise Development 16 (3): 58-67.

Helms, B. (2006) Access for All. Building Inclusive Financial Systems, CGAP/World Bank, Washington DC.

IDB (2001) Rural Financial Strategy, Sustainable Development Department, Sector Strategy and Policy Paper Series, IADB, Washington DC.

Jansen, S. (2004) Measuring the Impact of Microfinance: The Case of Financiera Calpía, GTZ, Abteiling 41, Finanzsystementwicklung, El Salvador and Eschbron.

Marchetti, P. (1996) ‘The anti-rural production bias in the Nicaraguan Financial Reform’, Nitlapán.

Morduch, J. (2000) ‘The microfinance schism’, World Development 28 (4): 617-629.

Nagarajan, G. and Meyer, R. (2005) Rural Finance: Recent Advances and Emerging Lessons, Debates, and Opportunities, Working Paper AEDE-WP-0041-05, Department of Agricultural, Environmental and Development Economics, Ohio State University, Columbus, Ohio.

Navajas, S. and Gonzalez-Vega, C. (2004) ‘Financiera Calpia, El Salvador: Innovative approaches to rural lending’, in M. Wenner, J. Alvarado and F. Galarza (eds) Promising Practices in Rural Finance: Experiences from Latin America and the Caribbean, pp. 177-211, Sustainable Development Department, IADB, Washington DC.

SIBOIF (2001) Norma Prudencial sobre Evaluación y Clasificación de Activos, CD-SIB-185-2-NOV9-2001, Superintendencia de Bancos y Otras Instituciones Financieras, Managua.