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This article examines the long‐ and short‐run effects of rural credit on the gross value added of agricultural output in Brazil. We apply the dynamic vector error correction model (VECM) to the estimation and testing. The main finding is that there is a positive long‐run relationship between agricultural sector production and loans from financial institutions to the agricultural sector. The long‐run elasticity estimated was 0.44, implying that an increase of 1% in rural credit leads to a 0.44% increase in the agricultural sector's GDP. This result supports the policy of rural credit as a crucial institutional instrument to strengthen the agricultural sector and as an important factor to boost the country's economic growth. [ABSTRACT FROM AUTHOR]

Credit was scarce and expensive in colonial India. Existing explanations assume a lack of market competition let moneylenders charge high interest rates. The article challenges this view and constructs a novel framework to explain the rationality and strategies of lenders. Using new evidence from the Madras Presidency, the study finds that the interconnected issues of climate volatility and enforcement costs shaped the supply and prices of credit. Climate volatility and uncertain seasonal incomes led to high default rates. Enforcement of contracts through courts was expensive and not appropriate where there was no wilful breach of contract. Moneylenders responded to risk in innovative ways. They rationed credit and imposed inflexible enforcement terms in the dry regions that faced higher climatic risk, but used contracts and flexible pricing strategies in the irrigated zones where risks were lower. [ABSTRACT FROM AUTHOR]

This paper evaluates the impact of Brazil's National Program to Strengthen Family Farming (PRONAF) on the time allocation of household members. We use data from the 2014 Pesquisa Nacional por Amostra de Domicílios, and we apply propensity score methods to complex surveys recently recommended in the literature. We find that PRONAF helps to increase focus on agricultural activities, but it also stimulates female partners to engage in unpaid work. The results show significant effects of PRONAF on child labor and on the gender‐specific division of labor within households, although it does not have the usual adverse effects of rural credit programs on school attendance. [ABSTRACT FROM AUTHOR]

This letter examines the state of financial inclusion in rural China. It shows that despite China's efforts at being financially inclusive there is substantial variability across and within provinces. With strong reliance on electronic technologies, China's rural and farm communities use internet technologies only half as much as all users, and less than 2% access credit through the internet. From a policy perspective, China should address problems of financial education and rural credit access. [ABSTRACT FROM AUTHOR]

The objective of this study is to determine the financing impact of total expenditure on the use of agriculture inputs (fertilizers, labor, and pesticides), and the output of cotton, rice, beans, corn, soybean, and wheat in Brazil. We study the period 1976-2005. The analysis is based on duality applied to the production theory. The output supplies and conditioned input demands are estimated from a translog multi-output, multi-input restricted profit function, where the total production credit is used as proxy of the total expenditure. Farmer expectations with respect to crop prices are incorporated to the estimation based on the quasi-rational expectation model. The output and input responses to the total expenditure are positive and statistically significant except for cotton, wheat, fertilizer, and pesticides. The short-run output supply response to own prices is inelastic, except for wheat, which presents elastic response to its price. Acreage has a positive impact on the output supply and it is influenced by land productivity. The main conclusion is that farmers face budget restrictions to purchase inputs, and a government credit program might increase the agricultural supply. [ABSTRACT FROM AUTHOR]

The new generation of credit programs directed at small borrowers emphasizes financial sustainability. Based on anecdotal information, proponents of cost recovery claim that raising formal lending rates would have a minimal impact on borrowing. However, rigorous evidence for this conjecture is sparse. The present 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. [ABSTRACT FROM AUTHOR]

The author tests two alternative models of price determination in informal rural credit markets, using LSMS data from Nepal. Strong support is found for a capacity-constrained collusive oligopoly model, where lenders have full information about actual borrowers and charge heterogeneous interest rates. Only marginal support is found for a competitive cost-pricing model with imperfect information. Interest rates vary with the observable characteristics of caste, installment period, and geographical region; and they decrease as village lending capacity increases up to a certain level. Interest rates do not depend on risk related variables such as land value and loan size. [ABSTRACT FROM AUTHOR]

We model the role of the informal credit sector in developing countries. The informational advantage of informal lenders is portrayed as the ability to monitor borrowers. Monitoring reduces the incentive problem and allows for contracts with lower collateral. This enables informal lenders to serve both individuals who cannot post the collateral required by the formal sector and those who are able but do not want to post collateral. The model is consistent with the conventional view of the informal sector as recipient of spillover demand from the formal sector. It also shows that the informal sector may provide partial insurance as the lower collateral requirement implies greater consumption smoothing for borrowers. [ABSTRACT FROM AUTHOR]

Empirical analysis of rural credit market failure has been of key scientific and political interest in recent years. The aim of this article is to give an overview of the various methods for measuring credit rationing that are employed in the literature. Furthermore, the methods are subjected to a comparative evaluation of their specific strengths or shortcomings. Six approaches are distinguished: measurement of loan transaction costs, analysis of qualitative information collected in interviews, analysis of quantitative information collected in interviews using the credit limit concept, analysis of spill-over effects with regard to secondary credit sources, econometric household modeling, and the econometric analysis of dynamic investment decisions. An explicit comparison with a first-best solution is impossible in the first three approaches, since they essentially rely on a subjective assessment of borrowers' access to credit, based on qualitative or quantitative indicators. The fifth and sixth approaches allow a rigorous interpretation in the framework of neoclassical equilibrium theory. The fourth approach takes an intermediate position, since spill-over on segmented loan markets reveals a willingness to pay with regard to the supposedly less expensive but rationed primary source. The approaches are fairly data demanding in general, usually requiring specific data on loan transactions. Even so, most approaches are applicable to cross-sectional household data. With the exception of the first, all methods surveyed might plausibly be used to empirically detect credit rationing. [ABSTRACT FROM AUTHOR]

Borrower-level data from 963 agricultural lending relationships are used to examine how several factors influence the costs and returns of extending agricultural credit. The results provide estimates of the costs and returns of agricultural lending and the extent to which these costs and returns are influenced by factors such as loan volume, lender/borrower relationship factors, and contract terms. The findings indicate that economies of size exist in agricultural credit delivery and that lenders pass most of these benefits on to borrowers through lower interest rates. In addition, the impacts of lender/borrower relationship factors were relatively small. [ABSTRACT FROM AUTHOR]

Abstract The paper provides a realistic explanation for the persistently large loan costs in the informal and formal credit markets of South Asia. In the presence of the adverse selection problems that arise from information asymmetries and discrepancies in credit services, price competition in somewhat differentiated products is sufficient to generate the high interest rate convergence observed in Nepalese credit markets. Most prior literature emphasizes collusion as the cause and leads to ineffective entry-oriented policy prescriptions. The new interpretation stresses the need to reduce information asymmetries, product differentiation, and moral hazard risks, while widening the spatial orbits of agent competition. [ABSTRACT FROM AUTHOR]

Financial liberalization is a key component of programmes of orthodox structural adjustment. Financial reforms include, among other things, the removal of controls on interest rates and the abolition of programmes of directed credit. Here the effect of financial sector reform on rural banking and rural credit transactions in India is examined, with particular reference to landless labour households. First, the trends in selected indicators of rural banking at the national level over the last 30 years are reviewed. Secondly, longitudinal data for a village in Tamil Nadu are used to examine changes in patterns of indebtedness and credit transactions among landless labour households. It is argued that the exploitation of landless labour households in the credit market has intensified with the introduction offinancial reforms. Lastly, the policy envisaged as an alternative to the formal credit sector in the countryside - the establishment of micro-credit projects - is examined critically. [ABSTRACT FROM AUTHOR]

The article focuses on the non-traditional financial sector and the rural credit market exclusion in Nicaragua. After 1990, the early and sharp contraction of state credit in Nicaragua along the lines required by structural adjustment and stabilization reforms left the majority of rural producers, small and medium-scale farmers, without access to producer credit. A non-traditional financial sector (NTFS) that operated through non-governmental organizations (NGOs) and consisting of several forms of credit unions and co-operatives expanded alongside the private commercial banking sector after 1990. It is reported that NTFS institutions had overcome early problems in credit delivery and recovery by tightening operational procedures in most cases.

Lack of rural credit in north-eastern Albania is one of the most important challenges facing the peasants in the area. In order to overcome the ineffective credit infrastructure prevailing after the break-up of the communist system in 1991, the Government of Albania, with the support of the World Bank, designed a project for the alleviation of this area's rural poverty. The project, which started in 1995, is co-financed by the International Fund for Agricultural Development, the Islamic Bank for Development and the Government of Albania. One of the project components is small scale credit for rural farmers. In the light of the experiences of the above project, this article reflects upon the future of rural credit in Albania by developing a theoretical framework which identifies the characteristics and principles to be addressed when attempting to rehabilitate the system. The framework examines the desirable preconditions, the strategic considerations, the optimum credit delivery systems and operational requirements to address the current constraints. The conjectural framework developed around some assumptions which, as the political situation was still uncertain at the time of writing, were not tested in the field. The conclusion of the study reflects the need to test these assumptions and to discuss the feasibility of using the policy framework with those empowered to implement the strategies. Copyright © 1999 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

Illustrates a method for quantifying conflicts arising in the decision-making process using the rural credit program of the National Bank of Nicaragua (NBN) as an example. Steps in decision making; Two types of rural credit program; Use of tests developed by psychologist Kenneth Hammond to examine conflict over problem identification; Rules of decision making.

Presents findings of research addressing the question of how women's status affects contraceptive use in rural Bangladesh. Background; Participation in rural credit programs; Level of empowerment; Results.

Examines changes in the mix between permanent and temporary agricultural employment in Pernambuco, Brazil. Changes in total peak season employment and wage levels; Introduction of severance pay legislation for rural labor; Reduction in farmers' incentive to employ workers on a year-round basis as a result of an increase in interest rates on rural credit in the 1980s.

In a comparative study of five countries: Australia, Canada, the Republic of Ireland, the UK, and the USA, this article examines the degree of convergence of agricultural credit policy content, policy instruments, and policy outcomes on a market liberal model. It shows that all five countries have moved toward market liberal policy arrangements over the past quarter century of globalizing and domestic fiscal pressures, but important differences in policy remain. The Republic of Ireland and the United Kingdom move further toward a market liberal model than do Australia, Canada, and the USA. The distinct national paths taken to market liberalism give rise to policy feedback that hastens or retards the adoption of a fully market liberal system. Historical choices of policy instruments and path dependence help account for continuing policy divergence. [ABSTRACT FROM AUTHOR]

This paper contrasts the recent experiences of two different institutions in providing credit and savings facilities in the countryside of Tamil Nadu, southern India. Ever since the late-1960s, there has been a rising demand for credit to finance investment in agriculture. This has been reinforced by Government policy over the last two decades, and especially since 1980, to provide credit both to priority activities, including agriculture, and to disadvantaged rural groups. Part of that policy has been to encourage the commercial banks to offer services in the countryside, alongside the previously well-developed network of cooperatives offering formal rural credit. The commercial banks have had considerable success in expanding their network of branches, and in increasing bank deposits and loans in rural areas. Operating as corporate bureaucracies, the banks have been able to expand without being crippled in the process. On the other hand, their institutional strength has meant that Government credit policy has been implemented cautiously. The agricultural credit cooperatives, no newcomers to the countryside, have still to fulfill their long-declared function of providing short-term credit for crop production to the majority of agricultural households. Loan recovery by the cooperatives has been weak. The cooperatives have suffered partly from the internal contradictions inherent in any cooperative structure imposed upon the peasantry, from major flaws in the organizational structure of Tamil Nadu cooperatives, as well as from the increasing appropriation of the cooperatives for party political ends. The contrasting experiences of the two different institutions in providing rural credit illustrate how policy applied through different institutions can produce quite different outcomes. They also demonstrate how changes in the socio-political environment, neither immediately obvious nor predictable, can critically affect policy results. [ABSTRACT FROM AUTHOR]

This appraisal of agro-based cooperatives in Peninsular Malaysia assesses performance in relation to savings mobilization, rural credit, land development and the provision of marketing facilities. The article points to the limited extent of their achievement and argues that while the cooperatives have achieved less measurable goals, without improving their performance in relation to economic goals, they will be unable to achieve their social purpose. [ABSTRACT FROM AUTHOR]

During the 1960's aid agencies channelled over one billion dollars to agricultural credit systems in Latin America. This plus local funds boosted the real value of rural credit by 12 percent per year. A number of assumptions underlying past credit policy are critically examined. It is argued that currently credit shortage is not the most pressing issue. Rather, emphasis should be placed on realistic pricing of rural credit and mobilizing rural savings for credit use through interest incentives. [ABSTRACT FROM AUTHOR]

Discusses the issue of rural bank regulation in the United States. Factors affecting the performance of rural banks; Changing net regulatory burden on rural banks; Burden reduction through regulatory competition.

Evaluates the policy recommendations made in the papers of agricultural economist Peter J. Barry et al and Professor Roger W. Gray which recognize the market risks that confront agricultural producers and emphasize the institutional factors accompanying the transfer of risk from government to marketplace respectively in the U.S. Recommendation of Barry et al that there be ties between rural areas and money market centers.

Discusses the effects of economic policy on rural banks and rural communities. Application of the theory of institutional innovation to the deregulation of financial institutions; Comparison of the performance of independent banks with that of the affiliates of multi-bank holding companies in the context of rural capital markets; Importance for unit banks to maintain a high ratio of equity capital to assets.

Comments on a study by Peter Barry concerning the changes in legislation on rural credit markets and the impacts of these changes on the suppliers of agricultural credit. Financial innovations that are having an impact on rural credit markets; Impacts of the anticipated legislative changes on rural credit markets; How an increase in the variability of interest rates can best be analyzed.

The authors analyze the economic efficiency of rural credit unions of large size compared to a group of credit unions. The methodology is based on the analysis of profitability, productivity and efficiency ratios and on the estimation of a Cobb-Douglas cost function. The evolution during the period 1989-1994 as well as the situation at the end of this period are examined. The same methodology is used to study the rural credit unions individually. [ABSTRACT FROM AUTHOR]

Presents abstracts from selected papers that deal with rural credit and economic reform in Africa. `Gender and Variety Selection: Farmers' Assessment of Local Corn Varieties in Southern Mali,' by Toon Defoer, Abdoulaye Kamara and others; `Nonprice Determinants of Input Acquisition Behavior in Senegal,' by Valerie Kelly, Bocar Diagana and others; Credit Unions in Niger: The WOCCU Experience,' by Korotoumou Ouattara and Mayada M. Baydas.