IDEAS home Printed from https://ideas.repec.org/a/oup/ajagec/v89y2007i4p991-1004.html

Risk, Wealth, and Sectoral Choice in Rural Credit Markets

Author

Listed:
  • Steve Boucher
  • Catherine Guirkinger

Abstract

We model the role of the informal credit sector in developing countries. The informational advantage of informal lenders is portrayed as the ability to monitor borrowers. Monitoring reduces the incentive problem and allows for contracts with lower collateral. This enables informal lenders to serve both individuals who cannot post the collateral required by the formal sector and those who are able but do not want to post collateral. The model is consistent with the conventional view of the informal sector as recipient of spillover demand from the formal sector. It also shows that the informal sector may provide partial insurance as the lower collateral requirement implies greater consumption smoothing for borrowers. Copyright 2007, Oxford University Press.

Suggested Citation

  • Steve Boucher & Catherine Guirkinger, 2007. "Risk, Wealth, and Sectoral Choice in Rural Credit Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(4), pages 991-1004.
    • Handle: RePEc:oup:ajagec:v:89:y:2007:i:4:p:991-1004
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1111/j.1467-8276.2007.01009.x
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or

    for a different version of it.

    Other versions of this item:

    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:oup:ajagec:v:89:y:2007:i:4:p:991-1004. 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: Oxford University Press (email available below). General contact details of provider: https://edirc.repec.org/data/aaeaaea.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.