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Sectoral credit choice in rural India

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  • Pal, Debdatta
  • Laha, Arnab K.

Abstract

This article examines the question, what makes a rural household a preferred choice for formal lenders? A sample selected ordered probit model is developed to address this question. While the selection equation models the determinants of access to credit, an ordered probit model is used to determine the factors affecting the choice of credit sources in hierarchical order. Using household data from six Indian states, this study finds corroborative evidence that relatively resource-rich households, even while staying at distant locations, enjoy greater access to formal creditors. It also identifies a new factor, i.e., interlinked credit, as a significant variable influencing access to formal credit.

Suggested Citation

  • Pal, Debdatta & Laha, Arnab K., 2015. "Sectoral credit choice in rural India," Journal of choice modelling, Elsevier, vol. 14(C), pages 1-16.
    • Handle: RePEc:eee:eejocm:v:14:y:2015:i:c:p:1-16
    DOI: 10.1016/j.jocm.2015.03.001
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    Cited by:

    1. Kumar, Anjani & Mishra, Ashok K. & Saroj, Sunil & Joshi, P.K., 2017. "Institutional versus non-institutional credit to agricultural households in India: Evidence on impact from a national farmers’ survey," Economic Systems, Elsevier, vol. 41(3), pages 420-432.
    2. Ojo, Temitope & Adetoro, Adetoso A. & Ogundeji, Abiodun A. & Belle, Johannes A., 2021. "Quantifying the Determinants of Climate Change Adaptation Strategies and Farmers’ Access to Credit in South Africa," 2021 Conference, August 17-31, 2021, Virtual 315853, International Association of Agricultural Economists.
    3. Aswini Kumar Mishra & Vedant Bhardwaj, 2022. "The Determinants of Access to Informal Credits in India: An Application of Quantiles via Moments Method," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 20(1), pages 1-22, March.
    4. Twine, Edgar & Rao, Elizaphan & Baltenweck, Isabelle & Omore, Amos, 2015. "Credit, Technology Adoption and Collective Action in Tanzania’s Smallholder Dairy Sector," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 204198, Agricultural and Applied Economics Association.
    5. T. O Ojo & L.J. S Baiyegunhi & A. O Salami, 2019. "Impact of Credit Demand on the Productivity of Rice Farmers in South West Nigeria," Journal of Economics and Behavioral Studies, AMH International, vol. 11(1), pages 166-180.
    6. Edgar E. Twine & Elizaphan J. O. Rao & Isabelle Baltenweck & Amos O. Omore, 2019. "Are Technology Adoption and Collective Action Important in Accessing Credit? Evidence from Milk Producers in Tanzania," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 31(3), pages 388-412, July.
    7. Anjani Kumar & Vinay K. Sonkar & K. S. Aditya, 2023. "Assessing the Impact of Lending Through Kisan Credit Cards in Rural India: Evidence from Eastern India," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 35(3), pages 602-622, June.

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    More about this item

    Keywords

    Rural credit; Sample selected ordered probit; India;
    All these keywords.

    JEL classification:

    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance

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