The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Moneylenders in Developing Countries

  • Hanan G. Jacoby
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_2817

Abstract

Moneylenders are a principal source of credit in developing countries. They thrive where collateral is scarce and legal enforcement of debt contracts is difficult. Their advantages over banks include better knowledge about creditworthiness of their clientele and greater ability to enforce repayment. Landlords lend to their sharetenants because they can capture a larger share of the tenants’ surplus than can outside lenders. Other credit by moneylenders is in kind, such as in the form of input advances or deferred rent. The effects of government credit policies depend importantly on the relationship between moneylenders and banks.

Keywords

Agricultural finance Asymmetric information Credit markets in developing countries Informal sector Moneylenders in developing countries 

JEL Classifications

O1 
This is a preview of subscription content, log in to check access

Bibliography

  1. Aleem, I. 1990. Imperfect information, screening and the costs of informal lending: A study of rural credit markets in Pakistan. World Bank Economic Review 4: 329–349.CrossRefGoogle Scholar
  2. Arimoto, Y. 2005. State-contingent rent reduction and tenancy contract choice. Journal of Development Economics 76: 355–375.CrossRefGoogle Scholar
  3. Basu, K., C. Bell, and P. Bose. 2000. Interlinkage, limited liability and strategic interaction. Journal of Economic Behavior and Organization 42: 445–462.CrossRefGoogle Scholar
  4. Bell, C., T. Srinivasan, and C. Udry. 1997. Rationing, spillover and interlinking in credit markets: the case of rural Punjab. Oxford Economic Papers 49: 557–587.CrossRefGoogle Scholar
  5. Burkhart, M., and T. Ellingsen. 2004. In-kind finance: a theory of trade credit. American Economic Review 94: 569–590.CrossRefGoogle Scholar
  6. Fafchamps, M., and Gubert, F. 2004. Contingent loan repayment in the Philippines. Discussion paper no. 215. Department of Economics, Oxford University. Online.Google Scholar
  7. Floro, M., and D. Ray. 1998. Vertical links between formal and informal financial institutions. Review of Development Economics 1: 34–56.CrossRefGoogle Scholar
  8. Giné, X. 2005. Access to capital in rural Thailand: An estimated model of formal vs. informal credit. Policy Research working paper no. 3502. Washington, DC: World Bank.Google Scholar
  9. Hoff, K., and J. Stiglitz. 1997. Moneylenders and bankers, price–increasing subsidies in a monopolistically competitive market. Journal of Development Economics 52: 429–462.CrossRefGoogle Scholar
  10. Innes, R. 1990. Limited liability and incentive contracting with ex-ante action choices. Journal of Economic Theory 52: 45–67.CrossRefGoogle Scholar
  11. Jain, S. 1999. Symbiosis vs. crowding-out, the interaction of formal vs. informal credit markets in developing countries. Journal of Development Economics 59: 419–444.CrossRefGoogle Scholar
  12. Kletzer, K., and B. Wright. 2000. Sovereign debt as intertemporal barter. American Economic Review 90: 621–639.CrossRefGoogle Scholar
  13. Kochar, A. 1997. An empirical investigation of rationing constraints in rural credit markets in India. Journal of Development Economics 53: 339–371.CrossRefGoogle Scholar
  14. La Ferrara, E. 2003. Kin groups and reciprocity: A model of credit transactions in Ghana. American Economic Review 93: 1730–1750.CrossRefGoogle Scholar
  15. Mansuri, G. 2007. Credit Layering in informal financial markets. Journal of Development Economics 84: 715–730.CrossRefGoogle Scholar
  16. Siamwalla, A., C. Pithong, N. Poapongsakorn, P. Satsanguan, P. Nettayarak, W. Mingmaneenakin, and Y. Tubpun. 1990. The Thai Rural credit system: Public subsidies, private information, and segmented markets. World Bank Economic Review 4: 271–296.CrossRefGoogle Scholar
  17. Stiglitz, J., and A. Weiss. 1981. Credit rationing in markets with imperfect information. American Economic Review 71: 383–410.Google Scholar
  18. Udry, C. 1994. Risk and insurance in a rural credit market: An empirical investigation in Northern Nigeria. Review of Economic Studies 61: 495–526.CrossRefGoogle Scholar

Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Hanan G. Jacoby
    • 1
  1. 1.