Do Small Farmers Borrow Less when the Lending rate Increases? The Case of Rice Farming in the Philippines
AbstractThe new generation of credit programs directed at small borrowers emphasizes financial sustainability. Based on anecdotal information (especially from microfinance experiences), proponents of cost recovery claim that raising formal lending rates would have a minimal impact on borrowing. Rigorous evidence for this conjecture is however sparse. This study conducts an econometric test of this conjecture using data from a survey of small rice farmers from the Philippines. Alternative regression techniques tend to reject the conjecture; in particular, a regression that controls for selection effects shows a unitary elastic response of formal borrowing to the lending rate.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 6044.
Date of creation: 2007
Date of revision:
credit demand; interest elasticity; rural credit; credit policy; Philippines; Asia;
Find related papers by JEL classification:
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance
This paper has been announced in the following NEP Reports:
- NEP-AGR-2007-12-08 (Agricultural Economics)
- NEP-ALL-2007-12-08 (All new papers)
- NEP-MFD-2007-12-08 (Microfinance)
- NEP-SEA-2007-12-08 (South East Asia)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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