Dualism, Technical Change, and Rural Finance Markets in Developing Countries

摘要

Research to date on rural financial markets (RFM) in developing countries has failed to explain the relationship between the growing dualism of RFM's into formal (banks, cooperatives) and informal (private moneylenders) credit sources and farmers' acceptance or rejection of new farm technology. This report, based on a 1968-71 survey of 3,000 Indian farmers, examines this relationship and its implications for Indian policy-makers. An overview of India's current rural credit situation reveals the growing importance of both formal credit sources and of technological change in the demand and supply of credit and the tendency for less-progressive farmers to seek credit from informal moneylenders. The determinants of informal credit interest rates are then analyzed with the help of an empirical model based on the opportunity costs of providing a loan, the administrative costs of handling a loan, and the risk factor assigned to various types of borrowers.