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Credit for What?: Informal Credit as a Coping Strategy of Market Women in Northern Ghana

Abstract

This paper explores the use of informal credit as a strategy for managing risks by market women in northern Ghana. A broad concept of the costs of risk management strategies is introduced and encompasses both a time and monetary dimension. Based on qualitative data, the analysis reveals that market women invest a considerable amount of time in maintaining complex networks of informal credit providers to insure their access to credit once a shock occurs. Informal credit involves high transaction costs and prevents market women from growing out of poverty in the long term.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.61912.de/dp715.pdf
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Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 715.

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Length: 28 p.
Date of creation: 2007
Date of revision:
Handle: RePEc:diw:diwwpp:dp715
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Keywords: Africa; Ghana; informal credit; risk management; women;

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Find related papers by JEL classification:
  • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
  • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
  • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation

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  1. Stefania Albanesi & Claudia Olivetti, 2006. "Home Production, Market Production and the Gender Wage Gap: Incentives and Expectations," NBER Working Papers 12212, National Bureau of Economic Research, Inc.
  2. Jin-Long Liu & Ching-Chun Hsu, 2004. "Economies of scale, gender discrimination, and cost of children," Applied Economics Letters, Taylor & Francis Journals, vol. 11(6), pages 377-382.
  3. Tsai, Kellee S., 2004. "Imperfect Substitutes: The Local Political Economy of Informal Finance and Microfinance in Rural China and India," World Development, Elsevier, vol. 32(9), pages 1487-1507, September.
  4. Aryeetey, Ernest & Udry, Christopher, 1997. "The Characteristics of Informal Financial Markets in Sub-Saharan Africa," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 6(1), pages 161-203, March.
  5. Udry, Christopher, 1990. "Credit Markets in Northern Nigeria: Credit as Insurance in a Rural Economy," World Bank Economic Review, World Bank Group, vol. 4(3), pages 251-69, September.
  6. Jain, Sanjay & Mansuri, Ghazala, 2003. "A little at a time: the use of regularly scheduled repayments in microfinance programs," Journal of Development Economics, Elsevier, vol. 72(1), pages 253-279, October.
  7. David Mushinski, 1999. "An analysis of offer functions of banks and credit unions in Guatemala," Journal of Development Studies, Taylor & Francis Journals, vol. 36(2), pages 88-112.
  8. Baydas, Mayada M. & Bahloul, Zakaria & Adams, Dale W., 1995. "Informal finance in Egypt: "Banks" within banks," World Development, Elsevier, vol. 23(4), pages 651-661, April.
  9. Gosling, Amanda & Karagiannaki, Eleni, 2004. "Intra-Household Allocation and the Living Standards of the Elderly in Greece," CEPR Discussion Papers 4776, C.E.P.R. Discussion Papers.
  10. Martin Browning & Valérie Lechene, 2001. "Caring and Sharing: Tests Between Alternative Models of Intra-household Allocation," Discussion Papers 01-07, University of Copenhagen. Department of Economics.
  11. 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.
  12. Christopher Udry & Timothy G. Conley, 2004. "Social Networks in Ghana," Working Papers 888, Economic Growth Center, Yale University.
  13. Kochar, Anjini, 1997. "An empirical investigation of rationing constraints in rural credit markets in India," Journal of Development Economics, Elsevier, vol. 53(2), pages 339-371, August.
  14. Bell, Clive & Srinivasan, T N & Udry, Christopher, 1997. "Rationing, Spillover, and Interlinking in Credit Markets: The Case of Rural Punjab," Oxford Economic Papers, Oxford University Press, vol. 49(4), pages 557-85, October.
  15. Sonia Bhalotra, 2004. "Early Childhood Investments in Human Capital: Parental Resources and Preferences," Bristol Economics Discussion Papers 04/562, Department of Economics, University of Bristol, UK.
  16. Suen, Wing & Chan, William & Zhang, Junsen, 2003. "Marital transfer and intra-household allocation: a Nash-bargaining analysis," Journal of Economic Behavior & Organization, Elsevier, vol. 52(1), pages 133-146, September.
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Cited by:

  1. Ganle, John Kuumuori & Afriyie, Kwadwo & Segbefia, Alexander Yao, 2015. "Microcredit: Empowerment and Disempowerment of Rural Women in Ghana," World Development, Elsevier, vol. 66(C), pages 335-345.
  2. Schicks, Jessica, 2014. "Over-Indebtedness in Microfinance – An Empirical Analysis of Related Factors on the Borrower Level," World Development, Elsevier, vol. 54(C), pages 301-324.
  3. Ha van Dung, 2014. "Short-term precaution, insurance and saving mechanisms in rural Vietnam," Working Papers CIE 82, Paderborn University, CIE Center for International Economics.
  4. World Bank, 2011. "Tackling Poverty in Northern Ghana," World Bank Other Operational Studies 2755, The World Bank.
  5. Bruck, Tilman & Schindler, Kati, 2008. "The Impact of Conflict and Fragility on Households: A Conceptual Framework with Reference to Widows," Working Paper Series RP2008/83, World Institute for Development Economic Research (UNU-WIDER).

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