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Determinants Influencing a Rural Household's Preference to Join Individual Liability or Joint Liability Micro Credit Contract Operated by Primary Aagricultural Credit Society

Author

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  • Kundu, AMIT
  • MITRA, SURANJANA

Abstract

Agriculture credit which is one form of micro credit mainly for the small and marginal farmers can be borrowed under two different types of short-term credit contracts: individual liability credit contract or joint liability credit contract under Primary Agricultural Credit Society (PACS). The basic objective of this paper is to identify the factors which influence a rural household to link himself directly with PACS for credit contract under individual liability micro credit contract or to take the initiative to join self-help group under PACS so that if required he/she can take credit under joint liability credit contract. Results reveal that higher education level and age reduces the probability of a rural people to join self-help group but aged farmers with certain size of land prefers to take credit under individual liability loan contract after taking direct membership of PACS. But ownership of land and its size is not a decision making factor during the time of formation self-help groups under PACS. Actually poor people with zero or small size of assets i.e. mainly the risky type borrowers were not ignored during the time of group formation.

Suggested Citation

  • Kundu, AMIT & MITRA, SURANJANA, 2009. "Determinants Influencing a Rural Household's Preference to Join Individual Liability or Joint Liability Micro Credit Contract Operated by Primary Aagricultural Credit Society," MPRA Paper 21784, University Library of Munich, Germany, revised 10 Oct 2009.
  • Handle: RePEc:pra:mprapa:21784
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    File URL: https://mpra.ub.uni-muenchen.de/22131/1/MPRA_paper_22131.pdf
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    References listed on IDEAS

    as
    1. Ghatak, Maitreesh, 2000. "Screening by the Company You Keep: Joint Liability Lending and the Peer Selection Effect," Economic Journal, Royal Economic Society, vol. 110(465), pages 601-631, July.
    2. Jonathan Conning, 2000. "Monitoring by Peers or by Delegates? Joint Liability Loans under Moral Hazard," Department of Economics Working Papers 2000-07, Department of Economics, Williams College.
    3. Xavier Gine & Dean Karlan, 2006. "Group versus Individual Liability: A Field Experiment in the Philippines," Working Papers 940, Economic Growth Center, Yale University.
    4. Ghatak, Maitreesh & Guinnane, Timothy W., 1999. "The economics of lending with joint liability: theory and practice," Journal of Development Economics, Elsevier, vol. 60(1), pages 195-228, October.
    5. Alessandro Fedele, 2006. "Joint Liability Lending In Microcredit Markets With Adverse Selection: A Survey," The IUP Journal of Bank Management, IUP Publications, vol. 0(2), pages 55-63, May.
    6. Beatriz Armendariz & Jonathan Morduch, 2007. "The Economics of Microfinance," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262512017, January.
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    Cited by:

    1. Kangogo, Daniel & Lagat, Job & Ithinji, Gicuru, 2013. "The Influence of Social Capital Dimensions on Household Participation in Micro-Credit Groups and Loan Repayment Performance in Uasin Gishu County, Kenya," MPRA Paper 48624, University Library of Munich, Germany.

    More about this item

    Keywords

    Agricultural credit; Micro credit; Individual liability; Joint liability; Primary Agricultural Credit Society;

    JEL classification:

    • C42 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Survey Methods
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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