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Group Lending Scheme operating through Primary Agricultural Credit Society: A Critical Assessment

Author

Listed:
  • Amit, Kundu
  • Suranjana, Mitra

Abstract

The basic objective of the paper is to identify the effectiveness of group lending based microfinance programme operating through Primary Agricultural Credit Society to improve the economic condition among the rural participants in two blocks of Hooghly district in West Bengal. Here to do the impact study we have considered both Difference-in-Difference and First Difference Method with the help of longitudinal data and it is applied to minimize the possibility of selection bias during the time of drawing samples. It came out from field survey that very few marginal farmers had taken credit from their respective groups for agricultural purposes. Results reveal that there has been no significant impact of microfinance programme in terms of improvement of the outcome variables among the member households in spite of low interest rate charged on loans, high repayment rate within groups and small size of self-help groups. The reasons responsible are lack of skill-based training programmes for the members of groups and lack of marketing facilities to promote and sell the products produced by the members of self-help groups. The only positive aspect is the members can now protect themselves from the crunches of professional money lenders who charged exorbitant interest rates

Suggested Citation

  • Amit, Kundu & Suranjana, Mitra, 2010. "Group Lending Scheme operating through Primary Agricultural Credit Society: A Critical Assessment," MPRA Paper 23239, University Library of Munich, Germany, revised 10 Jun 2010.
  • Handle: RePEc:pra:mprapa:23239
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    File URL: https://mpra.ub.uni-muenchen.de/23239/1/MPRA_paper_23239.pdf
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    References listed on IDEAS

    as
    1. Karlan, Dean S. & Zinman, Jonathan, 2009. "Expanding Microenterprise Credit Access: Using Randomized Supply Decisions to Estimate the Impacts in Manila," CEPR Discussion Papers 7396, C.E.P.R. Discussion Papers.
    2. Xavier Gine & Dean Karlan, 2006. "Group versus Individual Liability: A Field Experiment in the Philippines," Working Papers 940, Economic Growth Center, Yale University.
    3. Beatriz Armendariz & Jonathan Morduch, 2007. "The Economics of Microfinance," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262512017, January.
    4. Ricardo Bebczuk & Francisco Haimovich, 2007. "MDGs and Microcredit: An Empirical Evaluation for Latin American Countries," CEDLAS, Working Papers 0048, CEDLAS, Universidad Nacional de La Plata.
    5. Coleman, Brett E., 1999. "The impact of group lending in Northeast Thailand," Journal of Development Economics, Elsevier, vol. 60(1), pages 105-141, October.
    6. Coleman, Brett E., 2006. "Microfinance in Northeast Thailand: Who benefits and how much?," World Development, Elsevier, vol. 34(9), pages 1612-1638, September.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Microfinance; Self-help groups; Joint liability Credit Contract; Primary Agricultural Credit Society.;

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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