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Rural Financial Market Performance: Implications of Low Delinquency Rates

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  • Robert C. Vogel

Abstract

In contrast to most developing countries, nonrepayment of agricultural loans has not been a problem for the Costa Rican banking system. Delinquency rates have in fact been lower for agricultural than nonagricultural loans and lowest on loans to small farmers. This good performance is due largely to efficient techniques developed for gathering information about potential borrowers and incentives for borrowers to repay promptly to maintain access to bank loans which carry interest rates substantially below equilibrium. The pattern of low delinquency rates reflects the structure of low interest rates which causes farmers, especially small farmers, to be rationed most severely.

Suggested Citation

  • Robert C. Vogel, 1981. "Rural Financial Market Performance: Implications of Low Delinquency Rates," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 63(1), pages 58-65.
    • Handle: RePEc:oup:ajagec:v:63:y:1981:i:1:p:58-65.
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    File URL: http://hdl.handle.net/10.2307/1239811
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    Cited by:

    1. Imke Hering & Oliver Musshoff, 2017. "Progressive Lending in Microfinance—What about the Farmers?," Review of Development Economics, Wiley Blackwell, vol. 21(3), pages 803-828, August.
    2. Weber, Ron & Mußhoff, Oliver & Petrick, Martin, 2014. "How flexible repayment schedules affect credit risk in agricultural microfinance," DARE Discussion Papers 1404, Georg-August University of Göttingen, Department of Agricultural Economics and Rural Development (DARE).
    3. Müller, Kirsten & Musshoff, Oliver & Weber, Ron, 2014. "The more the better? How collateral levels affect credit risk in agricultural microfinance," DARE Discussion Papers 1402, Georg-August University of Göttingen, Department of Agricultural Economics and Rural Development (DARE).
    4. Mashatola, M.C. & Darroch, Mark A.G., 2003. "Factors affecting the loan status of sugarcane farmers using a graduated mortgage loan repayment scheme in KwaZulu-Natal," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 42(4), pages 1-13, December.
    5. Weber, Ron & Musshoff, Oliver, 2015. "Does pre-defined flexibility come with teh cost of higher credit risk? Evidence from agricultural micro lending in Madagascar," 2015 Conference, August 9-14, 2015, Milan, Italy 211905, International Association of Agricultural Economists.
    6. Albert N. Honlonkou & Denis H. Acclassato & Célestin Venant C. Quenum, 2006. "DÉterminants de la Performance de Remboursement Dans Les Institutions de MicroFinance au BÉnin," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 77(1), pages 53-81, March.
    7. Weber, Ron & Mußhoff, Oliver & Petrick, Martin, 2014. "How flexible repayment schedules affect credit risk in agricultural microfinance," DARE Discussion Papers 1404, Georg-August University of Göttingen, Department of Agricultural Economics and Rural Development (DARE).

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