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The Importance of the Informal Financial Market for Rural Development Financing in Developing Countries: The Example of Pakistan

Author

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  • Winfried Manig

    (Institute of Rural Development, University of Göttingen, Germany.)

Abstract

The informal credit market is of crucial importance in the rural areas in Pakistan, even after decades of considerable development of formal credit organisations and of subsidised credit programmes by the government. This is due mainly to the fact that informal credit relations are embedded in the economic, political, and social interaction networks of the inhabitants in the rural areas. These interaction networks also maintain the direct credit costs and the transaction costs at a low level. However, the national development policy underestimates or even negates the significance of the informal financial market. Here, political action is required for initiating change.

Suggested Citation

  • Winfried Manig, 1996. "The Importance of the Informal Financial Market for Rural Development Financing in Developing Countries: The Example of Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 35(3), pages 229-239.
    • Handle: RePEc:pid:journl:v:35:y:1996:i:3:p:229-239
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    References listed on IDEAS

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    1. Pollak, Robert A, 1985. "A Transaction Cost Approach to Families and Households," Journal of Economic Literature, American Economic Association, vol. 23(2), pages 581-608, June.
    2. Meyer, Richard L. & Nagarajan, Geetha, 1992. "An Assessment of the Role of Informal Finance in the Development Process," 1991 Conference, August 22-29, 1991, Tokyo, Japan 183352, International Association of Agricultural Economists.
    3. Murshid, K.A.S., 1992. "Informal Credit Markets in Bangladesh Agriculture: Bane or Boon?," 1991 Conference, August 22-29, 1991, Tokyo, Japan 183353, International Association of Agricultural Economists.
    4. Wanmali, Sudhir, 1992. "Rural infrastucture, the settlement system, and development of the regional economy in Southern India:," Research reports 91, International Food Policy Research Institute (IFPRI).
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    Cited by:

    1. Migheli, Matteo, 2016. "Land Ownership, Access to Informal Credit and Its Cost in Rural Vietnam," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201619, University of Turin.
    2. Md. Alamgir Hossain & Mohammad Abdul Malek & Zhengfei Yu, 2023. "Impact of Rural Credit on Household Welfare: Evidence from a Long-Term Panel in Bangladesh," Asian Development Review (ADR), World Scientific Publishing Co. Pte. Ltd., vol. 40(02), pages 363-397, September.
    3. Elmas Yaldız Hanedar & Yener Altunbas & Flavio Bazzana, 2014. "Why Do SMEs Use Informal Credit? A Comparison between Countries," Journal of Financial Management, Markets and Institutions, Società editrice il Mulino, issue 1, pages 65-86, July.

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