IDEAS home Printed from https://ideas.repec.org/p/iim/iimawp/wp00203.html
   My bibliography  Save this paper

Formal Vis-à-vis Informal Credit Supply Sources in Tribal Areas: A Case of Dharampur Taluka

Author

Listed:
  • Desai B M

Abstract

The informal credit suppliers give credit both in cash and grain, and for any purpose. They recover credit either in cash or grain or labor. Such terms and conditions suit most to the credit users whose demand for subsistence credit is acute and who have extremely limited and even stagnant opportunities to develop their economic activities in agriculture and forests. Under such conditions, the stereotyped functions of formal credit suppliers prove thoroughly inadequate. They can rarely meet the implicit policy objective of substituting an informal credit supply source. The credit source substitution process is a decision making process of the borrowers. And it is influenced by the incremental gains perceived by them. Incremental gains are defined as opportunity gains expected to be realized as a result of substitution of one source of credit for the other. Conversely, incremental losses are defined as opportunity gains expected to be lost in this process. Under the existing terms and conditions of the two types of credit sources, the incremental gains and losses are basically affected by (a) availability of an access to grain markets, (b) availability of employment, (c) interest rates, (d) grain prices, and (e) wage rates. If interest rates alone were relevant, a family would perceive an incremental benefit of Rs. 13 on every Rs. 100 borrowed from a cooperative instead of from a trade-cum-landowner, assuming interest rates of 12% and 25% respectively. However, the other factors particularly (a) and (b), have such a dominating influence that this gain would be wiped out and the family would tend not to substitute cooperative credit for moneylender credit.

Suggested Citation

  • Desai B M, 1976. "Formal Vis-à-vis Informal Credit Supply Sources in Tribal Areas: A Case of Dharampur Taluka," IIMA Working Papers WP1976-07-01_00203, Indian Institute of Management Ahmedabad, Research and Publication Department.
  • Handle: RePEc:iim:iimawp:wp00203
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iim:iimawp:wp00203. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/eciimin.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.