IDEAS home Printed from https://ideas.repec.org/p/sch/wpaper/273.html
   My bibliography  Save this paper

Repayment of Short Term Loans in the Formal Credit Market: The Role of Accessibility to Credit from InformalSources

Author

Listed:
  • Manojit Bhattacharjee

    (Institute for Social and Economic change)

  • Meenakshi Rajeev

    (Institute for Social and Economic change)

Abstract

This paper is an attempt to link the problem of non-repayment in the formal credit market with the accessibility to credit from informal sources. In many developing countries a well established network of informal lenders continues to prevail in spite of various formal lending programmes implemented by the government. Scholars often dealt with how the poorer households become the victim of usurious rates of interest charged by informal lenders and lose their valuable properties. We however show that more unfavourable the terms of loan from a moneylender compared to that of a formal lending agency, better is the chance of a borrower making timely repayment and get the benefit of formal loan on a recurring basis, which is not available in case of default. After establishing the conditions theoretically, the paper using National Sample Survey Organisation (NSSO, India) database, empirically tries to examine such an impact in the case of short term formal loans. The empirical analysis reveals the positive and significant impact of informal interest rates on repayment of formal loans.

Suggested Citation

  • Manojit Bhattacharjee & Meenakshi Rajeev, 2012. "Repayment of Short Term Loans in the Formal Credit Market: The Role of Accessibility to Credit from InformalSources," Working Papers 273, Institute for Social and Economic Change, Bangalore.
  • Handle: RePEc:sch:wpaper:273
    as

    Download full text from publisher

    File URL: http://www.isec.ac.in/WP%20273%20-%20Manojit%20bhattacharjee.pdf
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Meenakshi Rajeev, 2015. "Is Access to Loan Adequate for Financing Capital Expenditure? A Household-level Analysis on Some Selected States of India," Working Papers id:7880, eSocialSciences.
    2. repec:ilo:ilowps:488324 is not listed on IDEAS
    3. Rajeev, Meenakshi., 2015. "Financial inclusion and disparity : a case of India," ILO Working Papers 994883243402676, International Labour Organization.

    More about this item

    Keywords

    Repayment; Formal Lending Agency; Informal Lending Agency;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sch:wpaper:273. 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: (B B Chand). General contact details of provider: http://edirc.repec.org/data/iseccin.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.