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Rural Women's Access to Credit: Market Imperfections and Intrahousehold Dynamics

  • Fletschner, Diana
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    Summary Credit rationing studies carried out at the household level and based on responses from male heads of households present an incomplete and biased assessment of who is likely to be constrained, why they are constrained, and what is the extent of the constraints. They ignore possibly conflictive intrahousehold dynamics and assume that imperfections in rural financial markets are gender-neutral. This paper addresses both issues theoretically and empirically. The Semi-Cooperative Household model developed for this analysis formalizes the conditions under which spouses', and particularly women's, individual access to credit can be affected by their own position in the financial market as well as by intrahousehold dynamics. These notions are then explored empirically using husbands' and wives' individual perceptions of their access to credit in rural Paraguay. The most significant empirical findings of the paper are that (i) compared to men, women are more likely to be credit constrained; (ii) women's rationing status responds to a different set of factors than men's; and (iii) husbands may choose not to intermediate capital to their wives even when they are able to do so. Results from this exercise provide empirically sound support for the assumptions underlying women-targeted credit programs.

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    Article provided by Elsevier in its journal World Development.

    Volume (Year): 37 (2009)
    Issue (Month): 3 (March)
    Pages: 618-631

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    Handle: RePEc:eee:wdevel:v:37:y:2009:i:3:p:618-631
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    1. Mark M. Pitt & Shahidur R. Khandker & Omar Haider Chowdhury & Daniel L. Millimet, 2003. "Credit Programs for the Poor And the Health Status of Children in Rural Bangladesh," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(1), pages 87-118, February.
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    13. Udry, Christopher, 1996. "Gender, Agricultural Production, and the Theory of the Household," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 1010-46, October.
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