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The Structure of Informal Credit Market in Pakistan

  • M. Irfan

    (Pakistan Institute of Development Economics, Islamabad.)

  • G. M. Arif

    (Pakistan Institute of Development Economics, Islamabad.)

  • Syed Mubashir Ali

    (Pakistan Institute of Development Economics, Islamabad.)

  • Hina Nazli

    (Pakistan Institute of Development Economics, Islamabad.)

This study has examined the structure of informal credit market in Pakistan by combining two approaches; a field survey administering semi-structured questionnaire to more than 1000 informal lenders supplemented by case studies. According to the survey, a good deal of interlinkages exists between formal and informal credit institutions. However, iriformal credit system draws readily on additional sources JncIuding friends and moneylenders. Informal credit market can be characterized as competitive. If a monopolistic situation prevails in the market it is because of peculiarirelationship between lender and borrower, such as landlord vs. tenant. It appears from the survey that like the formal financial market, lenders in the informal markets also follow credit worthiness as the major criteria to lend. This reduces considerably the levels of funds allocated to less privileged and assetless.

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Paper provided by Pakistan Institute of Development Economics in its series PIDE-Working Papers with number 1999:168.

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Length: 67 pages
Date of creation: 1999
Date of revision:
Handle: RePEc:pid:wpaper:1999:168
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  1. Qureshi, Sarfraz K. & Abbas, Kalbe & Siddiqui, Ahmed Naeem & Ghani, Ejaz, 1984. "Rural Credit and Rural Development: Some Issues," MPRA Paper 6799, University Library of Munich, Germany.
  2. Bell, Clive, 1990. "Interactions between Institutional and Informal Credit Agencies in Rural India," World Bank Economic Review, World Bank Group, vol. 4(3), pages 297-327, September.
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