Do Small Farmers Borrow Less when the Lending rate Increases? The Case of Rice Farming in the Philippines
The new generation of credit programs directed at small borrowers emphasizes financial sustainability. Based on anecdotal information (especially from microfinance experiences), proponents of cost recovery claim that raising formal lending rates would have a minimal impact on borrowing. Rigorous evidence for this conjecture is however sparse. This study conducts an econometric test of this conjecture using data from a survey of small rice farmers from the Philippines. Alternative regression techniques tend to reject the conjecture; in particular, a regression that controls for selection effects shows a unitary elastic response of formal borrowing to the lending rate.
|Date of creation:||2007|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Sharma, Manohar & Zeller, Manfred, 2000. "Rural financial services for poverty alleviation," MP05 briefs 7, International Food Policy Research Institute (IFPRI).
- Dehejia, Rajeev & Montgomery, Heather & Morduch, Jonathan, 2012.
"Do interest rates matter? Credit demand in the Dhaka slums,"
Journal of Development Economics,
Elsevier, vol. 97(2), pages 437-449.
- Dehejia, Rajeev & Montgomery, Heather & Morduch, Jonathan, 2005. "Do interest rates matter? credit demand in the Dhaka Slums," MPRA Paper 33146, University Library of Munich, Germany.
- Jonathan Morduch, 1999. "The Microfinance Promise," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1569-1614, December.
- Dean Karlan & Jonathan Zinman, 2005. "Elasticities of Demand for Consumer Credit," Working Papers 926, Economic Growth Center, Yale University.
- Jonathan Conning & Christopher Udry, 2005. "Rural Financial Markets in Developing Countries," Working Papers 914, Economic Growth Center, Yale University.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:6044. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht)
If references are entirely missing, you can add them using this form.