Briones, Roehlano (2007): Do Small Farmers Borrow Less when the Lending rate Increases? The Case of Rice Farming in the Philippines.
Download (142kB) | Preview
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.
|Item Type:||MPRA Paper|
|Original Title:||Do Small Farmers Borrow Less when the Lending rate Increases? The Case of Rice Farming in the Philippines|
|Keywords:||credit demand, interest elasticity, rural credit, credit policy, Philippines, Asia|
|Subjects:||O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O16 - Financial Markets ; Saving and Capital Investment ; Corporate Finance and Governance
Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q1 - Agriculture > Q14 - Agricultural Finance
|Depositing User:||Roehlano Briones|
|Date Deposited:||02. Dec 2007 06:37|
|Last Modified:||28. Apr 2015 14:52|
Amanoo, E., P. Kojo Acquah, E. Ekow Asmah (2003). The Impact of Interest Rates on Demand for Credit and Loan Repayment by the Poor and SMEs in Ghana, Impact of Financial Sector Liberalization on the Poor Research Paper No. 03-10, International Labour Office, Geneva.
Banerjee, A. (2003). Contracting Constraints, Credit Markets, and Economic Development, in Diwatripont, M., L. P. Hansen, and S. Turnovsky (eds.), Advances in Economics and Econometrics: Theory and Applications, 8th World Congress, vol. 3, Cambridge University Press, Cambridge.
Bravo, M., and B. Pantoja (1998). Beyond 2000: Assessment of the Economy and Policy Recommendations – Dealing with Agrarian Reform, Discussion Paper Series No. 98-09, Philippine Institute of Development Studies, Makati.
Cañeda, L., and J.Badiola (1999). Small Farmer Credit Experience, 1970s to 1990s, in Small Farmer Credit Delivery After the 1980s Reforms: Symposium Proceedings, Agricultural Credit Policy Council, Manila.
Conning, J., and C.Udry (2005). Rural Financial Markets in Developing Countries, in R. Evenson, P. Pingali, and T. Schultz (eds.), Handbook of Agricultural Economics, vol. 3: Agricultural Development: Farmers, Farm Production and Farm Markets, Elsevier, Amsterdam.
Consultative Group to Assist the Poor (2004). Key Principles of Microfinance, http://www.cgap.org/keyprinciples.html.
Dehejia, R., H. Montgomery, and J. Morduch (2005). Do Interest Rates Matter? Credit Demand in the Dhaka Slums, Discussion Paper No. 37. Asian Development Bank Institute, Tokyo.
Floro, S., and P. Yotopoulos (1991). Informal Credit Markets and the New Institutional Economics: The Case of Philippine Agriculture, Westview Press, Boulder, Colorado. Karlan, D. and J. Zinman (2005). Elasticities of Demand for Consumer Credit, Discussion Paper No. 926, Yale University Economic Growth Center.
Littlefield, E., and R. Rosenberg (2004). Microfinance and the poor. Finance and Development 41(1):38-40.
Montemayor, R. (1999). The Philippine crop insurance program: status, problems, and prospects, in Small Farmer Credit Delivery After the 1980s Reforms Agricultural Credit Policy Council Symposium Proceedings, Quezon City.
Morduch, J. (1999). The Microfinance Promise, Journal of Economic Literature 37(4): 1569-1614.
Zeller, M., and M. Sharma (2001). Rural Financial Services for Poverty Alleviation: The Role of Public Policy, in P.P. Andersen and R. Pandya Lorch (eds.), The Unfinished Agenda: Perspectives on Overcoming Hunger, Poverty, and Environmental Degredation, International Food Policy Research Institute, Washington, D.C.