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Asymmetric Information in Rural Financial Markets and Interlinking of Transactions Through Self-Help Groups

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  • Llanto, Gilberto M.

Abstract

One of the issues contending the rural borrowers, who are composed of small entrepreneurs, fishermen and farmers, is the access to financial services of formal financial institutions. With this fact on hand, this article discusses the issue within the framework of asymmetry of information existing in rural financial markets. It shows that the observed interlinking transactions between banks and various self-help groups provides a mechanism to ensure access to bank credit.

Suggested Citation

  • Llanto, Gilberto M., 1989. "Asymmetric Information in Rural Financial Markets and Interlinking of Transactions Through Self-Help Groups," Philippine Journal of Development JPD 1989 Vol. XVI No. 1-e, Philippine Institute for Development Studies.
    • Handle: RePEc:phd:pjdevt:jpd_1989_vol__xvi_no__1-e
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    References listed on IDEAS

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    1. Gangopadhyay, Shubhashis & Sengupta, Kunal, 1986. "Interlinkages in Rural Markets," Oxford Economic Papers, Oxford University Press, vol. 38(1), pages 112-121, March.
    2. Gerhard Clemenz & Mona Ritthaler, 1992. "Credit markets with asymmetric information : a survey," Finnish Economic Papers, Finnish Economic Association, vol. 5(1), pages 12-26, Spring.
    3. Basu, Kaushik, 1983. "The Emergence of Isolation and Interlinkage in Rural Markets," Oxford Economic Papers, Oxford University Press, vol. 35(2), pages 262-280, July.
    4. Leland, Hayne E & Pyle, David H, 1977. "Informational Asymmetries, Financial Structure, and Financial Intermediation," Journal of Finance, American Finance Association, vol. 32(2), pages 371-387, May.
    5. Bardhan, Pranab K, 1980. "Interlocking Factor Markets and Agrarian Development: A Review of Issues," Oxford Economic Papers, Oxford University Press, vol. 32(1), pages 82-98, March.
    6. Mitra, Pradeep K., 1983. "A theory of interlinked rural transactions," Journal of Public Economics, Elsevier, vol. 20(2), pages 167-191, March.
    7. Bhaduri, Amit, 1977. "On the Formation of Usurious Interest Rates in Backward Agriculture," Cambridge Journal of Economics, Oxford University Press, vol. 1(4), pages 341-352, December.
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    Cited by:

    1. Saldaña, Cesar G., 2000. "Assessing the Economic Value of Credit Guarantees," Philippine Journal of Development JPD 2000 Vol. XXVII No. 1, Philippine Institute for Development Studies.
    2. Kumar, Dr.B.Pradeep, 2017. "Financial Vulnerability among Tribes in Rural Areas: Certain Observations from a Study," MPRA Paper 82425, University Library of Munich, Germany, revised 18 Aug 2017.
    3. Kumar, Dr.B.Pradeep, 2014. "Access to Finance and Human Rights," MPRA Paper 80336, University Library of Munich, Germany, revised 2014.
    4. Alma M. dela Cruz, 2007. "Contractual Arrangements in Agriculture (Northern and Central Luzon Component)," Development Economics Working Papers 22626, East Asian Bureau of Economic Research.
    5. Kumar, Dr.B.Pradeep, 2016. "Institutional Response to the Problem of Access to Finance: Evidence from the Tribal Economy of Kerala," MPRA Paper 82430, University Library of Munich, Germany, revised 2016.
    6. Kumar, Dr.B.Pradeep, 2011. "Financial Exclusion: A Theoretical Approach," MPRA Paper 89864, University Library of Munich, Germany, revised 17 Jun 2011.
    7. Dela Cruz, Alma M., 2007. "Contractual Arrangements in Agriculture (Northern and Central Luzon Component)," Discussion Papers DP 2007-21, Philippine Institute for Development Studies.

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