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Accessibility to Credit and its Determinants: A State-level Analysis of Cultivator Households in India

Author

Listed:
  • Manojit Bhattacharjee

    (Manojit Bhattacharjee is Assistant Professor at St. Joseph’s College, Bangalore, email: manojit850@gmail.com)

  • Meenakshi Rajeev

    (Meenakshi Rajeev is Professor at the Institute for Social and Economic Change, Bangalore, email: meenakshi@isec.ac.in)

Abstract

It is well known that around 80 per cent of farmers in India are in the small or marginal farmers group which requires financial resources on a regular basis for their farming activities. Needless to say, as these households do not possess adequate savings, accessibility to financial resources at reasonable terms and conditions from financial intermediaries becomes a crucial parameter for their productive activities and hence, in turn, their well-being. Based on the 59th round of household-level data from the Debt and Investment Survey and the Situation Assessment Survey (SAS) of farmers provided by the National Sample Survey Organisation (NSSO) of India, this article examines the nature of exclusion faced by farmer households in credit markets across selected prominent states of India. This is done by constructing an indicator, namely, the ‘incidence of borrowing’. This article also tries to identify the factors that explain exclusion from access to financial resources by developing a methodology for the detection of credit exclusion. Our results show that the relation between the cost of credit (interest rate) and access to credit depends heavily on the extent of prevalence of informal lenders in a region. JEL Classification: O1, O2

Suggested Citation

  • Manojit Bhattacharjee & Meenakshi Rajeev, 2014. "Accessibility to Credit and its Determinants: A State-level Analysis of Cultivator Households in India," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 8(3), pages 285-300, August.
    • Handle: RePEc:sae:mareco:v:8:y:2014:i:3:p:285-300
    DOI: 10.1177/0973801014531137
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    References listed on IDEAS

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    1. Narayanamoorthy, A. & Kalamkar, S.S., 2005. "Indebtedness of Farmer Households Across States: Recent Trends, Status and Determinants," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 60(3), pages 1-13.
    2. Manojit Bhattacharjee & Meenakshi Rajeev, 2010. "Interest rate formation in informal credit markets in India: does level of development matter?," Global Development Institute Working Paper Series 12610, GDI, The University of Manchester.
    3. Manojit Bhattacharjee & Meenakshi Rajeev, 2013. "Credit Exclusion of the Poor: A Study of Cultivator Households in India," ICDD Working Papers 8, University of Kassel, Fachbereich Gesellschaftswissenschaften (Social Sciences), Internatioanl Center for Development and Decent Work (ICDD).
    4. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
    5. Milton Friedman & L. J. Savage, 1948. "The Utility Analysis of Choices Involving Risk," Journal of Political Economy, University of Chicago Press, vol. 56, pages 279-279.
    6. Manojit Bhattacharjee & Meenakshi Rajeev & B.P. Vani, 2009. "Asymmetry in Information and Varying Rates of Interest," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 3(4), pages 339-364, October.
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    Cited by:

    1. Imelda T. Angeles & Ma. Socorro P. Calara & Allan B. Guzman, 2019. "The mediating effect of microfinancing on access to finance and growth of microenterprises: evidence from the Philippines," Journal of Global Entrepreneurship Research, Springer;UNESCO Chair in Entrepreneurship, vol. 9(1), pages 1-16, December.
    2. 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.

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    More about this item

    Keywords

    Accessibility to Credit; Financial Exclusion;

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O2 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy

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