Abstract

http://ssrn.com/abstract=310439
 
 

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Horizontal and Vertical Linkages Between Formal and Informal Credit Markets in Backward Agriculture: A Theoretical Analysis


Sarbajit Chaudhuri


University of Calcutta

Jayanta Kumar Dwibedi


Brahmmananda Keshab Chandra (B.K.C.) College - Department of Economics


Indian Journal of Social Development, Vol. 2, No. 1, June 2002

Abstract:     
The paper shows that the policy of forging a vertical linkage between the formal and informal credit markets is distinctly superior to the existing credit policy of horizontally substituting the informal sector by the formal one. An inflow of subsidized formal credit to the informal lenders not only ensures better terms of borrowing to the small borrowers but also leads to higher agricultural productivity vis-a-vis the horizontal linkage case. Even if the informal sector lenders are allowed to collude, the informal interest rate is still lower in the vertical linkage case.

Number of Pages in PDF File: 13

Keywords: Formal credit, informal credit, horizontal linkage, vertical linkage, moneylender, collusion

JEL Classification: Q14, O17, D89

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Date posted: May 24, 2002  

Suggested Citation

Chaudhuri, Sarbajit and Dwibedi, Jayanta Kumar, Horizontal and Vertical Linkages Between Formal and Informal Credit Markets in Backward Agriculture: A Theoretical Analysis. Indian Journal of Social Development, Vol. 2, No. 1, June 2002. Available at SSRN: http://ssrn.com/abstract=310439 or http://dx.doi.org/10.2139/ssrn.310439

Contact Information

Sarbajit Chaudhuri (Contact Author)
University of Calcutta ( email )
56A, B.T. Road
Kolkata, West Bengal 700 050
India
+91 33 2557 5082 (Phone)
+91 33 2844 1490 (Fax)
HOME PAGE: http://econpapers.repec.org/RAS/pch11.htm
Jayanta Kumar Dwibedi
Brahmmananda Keshab Chandra (B.K.C.) College - Department of Economics ( email )
Kolkata 700 035 West Bengal
India
91-33-564-4950 (Phone)
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