interventions in rural credit markets in developing countries are common
and take many different forms. Chief among them is government ownership
of banks; India and Mexico, for example, nationalized their major banks
in 1969 and 1982, respectively. In these cases the government can compel its
banks to set up branches in rural areas and to lend to farmers. Governments
in other countries, such as Nigeria, have imposed a similar obligation on commercial
banks (see Okorie 1990). So the presence of a bank in a particular area
is not sufficient reason to assume that the bank has chosen to operate there or
that it is operating profitably.