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Determinants of credit rationing

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  • Zeller, Manfred

Abstract

Previous research on the determinants of credit rationing exclusively focused on the behavior of formal lenders who contract directly with an individual borrower. Based on a household survey in Madagascar, this paper presents an analysis of credit rationing behavior by informal lenders and by members of community-based groups that allocate formal group loans among themselves. The results show that group members obtain and use locally available information about the applicant's creditworthiness in much the same way that informal lenders do. This paper therefore empirically confirms theoretical arguments made that community-based groups have an information advantage over distant formal bank agents.

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Bibliographic Info

Paper provided by International Food Policy Research Institute (IFPRI) in its series FCND discussion papers with number 2.

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Date of creation: 1994
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Handle: RePEc:fpr:fcnddp:2

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Keywords: Banks and banking Africa. ; Credit Madagascar ;

References

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  1. Coate, Stephen & Ravallion, Martin, 1993. "Reciprocity without commitment : Characterization and performance of informal insurance arrangements," Journal of Development Economics, Elsevier, vol. 40(1), pages 1-24, February.
  2. Huppi, Monika & Feder, Gershon, 1989. "The role of groups and credit cooperatives in rural lending," Policy Research Working Paper Series 284, The World Bank.
  3. Bhatt, V. V., 1988. "On financial innovations and credit market evolution," World Development, Elsevier, vol. 16(2), pages 281-292, February.
  4. Feder, Gershon & Lau, Lawrence J. & Lin, Justin Y. & Xiaopeng Luo, 1991. "Credit's effect on productivity in Chinese agriculture : a microeconomic model of disequilibrium," Policy Research Working Paper Series 571, The World Bank.
  5. Jappelli, Tullio, 1990. "Who Is Credit Constrained in the U.S. Economy?," The Quarterly Journal of Economics, MIT Press, vol. 105(1), pages 219-34, February.
  6. Stiglitz, Joseph E, 1990. "Peer Monitoring and Credit Markets," World Bank Economic Review, World Bank Group, vol. 4(3), pages 351-66, September.
  7. Alderman, Harold & Paxson, Christina H & DEC, 1992. "Do the poor insure? A synthesis of the literature on risk and consumption in developing countries," Policy Research Working Paper Series 1008, The World Bank.
  8. Hossain, Mahabub, 1988. "Credit for alleviation of rural poverty: the Grameen Bank in Bangladesh," Research reports 65, International Food Policy Research Institute (IFPRI).
  9. Yaron, J., 1992. "Successful Rural Finance Institutions," World Bank - Discussion Papers 150, World Bank.
  10. 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.
  11. Yadav, S. & Otsuka, K. & David, C. C., 1992. "Segmentation in rural financial markets: the case of Nepal," World Development, Elsevier, vol. 20(3), pages 423-436, March.
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Citations

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Cited by:
  1. Menkhoff, Lukas & Rungruxsirivorn, Ornsiri, 2009. "Village Funds in the Rural Credit Market of Thailand," Proceedings of the German Development Economics Conference, Frankfurt a.M. 2009 45, Verein für Socialpolitik, Research Committee Development Economics.
  2. Assaad, Ragu & El-Hamidi, Fatma & Ahmed, Akhter U., 2000. "The determinants of employment status in Egypt," FCND discussion papers 88, International Food Policy Research Institute (IFPRI).
  3. Galarza, Francisco, 2003. "El crédito solidario, el colateral social, y la colusión. Algunos apuntes
    [Group Lending, Social Collateral and Collusion. Some Notes]
    ," MPRA Paper 30442, University Library of Munich, Germany.
  4. Moser, Christine M. & Barrett, Christopher B., 2003. "The disappointing adoption dynamics of a yield-increasing, low external-input technology: the case of SRI in Madagascar," Agricultural Systems, Elsevier, vol. 76(3), pages 1085-1100, June.
  5. Andrés Murcia Pabón, . "Determinantes Del Acceso Al Crédito De Los Hogares Colombianos," Borradores de Economia 449, Banco de la Republica de Colombia.
  6. McKernan, Signe-Mary & Pitt, Mark M. & Moskowitz, David, 2005. "Use of the formal and informal financial sectors : does gender matter? empirical evidence from rural Bangladesh," Policy Research Working Paper Series 3491, The World Bank.
  7. Petrick, Martin, 2004. "Credit rationing of Polish farm households: a theoretical and empirical analysis," Studies on the Agricultural and Food Sector in Central and Eastern Europe, Leib­niz Institute of Agricultural Development in Central and Eastern Europe (IAMO), volume 26, number 93022.
  8. Vuong Quoc, Duy, 2012. "Determinants of household access to formal credit in the rural areas of the Mekong Delta, Vietnam," MPRA Paper 38202, University Library of Munich, Germany.
  9. Bime, Mary-Juliet & Mbanasor, J. A., 2011. "Analysis of rural credit market performance in north west region, Cameroon," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 3(3), September.
  10. Diagne, Aliou & Zeller, Manfred, 2001. "Access to credit and its impact on welfare in Malawi:," Research reports 116, International Food Policy Research Institute (IFPRI).

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