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Formal and informal sectors: Interactions between moneylenders and traditional banks in the rural Indian credit market

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  • Orso, Cristina Elisa

Abstract

This paper describes, through a theoretical approach, the interactions between institutional lenders and local moneylenders, and how these affect the rural credit market. It evaluates the effects produced by the introduction of "spillovers" in a rural credit market with rationing in which banks and moneylenders interact simultaneously while working in distinct segments. Due to the strong and consolidated social ties, it is probable that the spread of knowledge concerning potential debtors comes about in targeted and rapid way with reduced costs for the lenders as well.

Suggested Citation

  • Orso, Cristina Elisa, 2009. "Formal and informal sectors: Interactions between moneylenders and traditional banks in the rural Indian credit market," POLIS Working Papers 135, Institute of Public Policy and Public Choice - POLIS.
    • Handle: RePEc:uca:ucapdv:135
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    Cited by:

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    2. Marchese Carla & Ramello Giovanni B., 2011. "In the Beginning Was the Word. Now is the Copyright," Review of Law & Economics, De Gruyter, vol. 7(1), pages 271-289, October.

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    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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