Screening and Monitoring in Informal Credit Markets: Evidence from Rural Punjab

South Asia Economic Journal Pub Date : 2022-07-10 DOI:10.1177/13915614221107844

Indervir Singh

引用次数: 0

Abstract

The present article examines the screening and monitoring strategies used by lenders to solve the problem of imperfect information in the rural informal credit market. The study uses data from a primary survey conducted in Punjab, India. The survey focuses on informal lending between commission agents and farmers. Data were collected from 120 randomly selected commission agents from four blocks. Each of the blocks represents a different development level. The results show that commission agents invested significant time and resources for screening and monitoring the farmers. The screening and monitoring were found to be more stringent in areas that were underdeveloped and had higher default risk. Commission agents could shift a significant share of the screening cost to the borrowers, thereby increasing their self-enforcement range. The study argues that high screening cost hurts small farmers. The regression results found a significant reduction in the default rate and the unrecovered loan due to screening strategies. JEL Classification: D81, E26, Q14

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非正式信贷市场的筛选和监测:来自旁遮普农村的证据

本文考察了贷款人为解决农村非正规信贷市场信息不完全问题所采用的筛选和监测策略。这项研究使用了在印度旁遮普进行的一项初步调查的数据。调查的重点是佣金代理和农民之间的非正式贷款。数据是从四个街区随机选择的120名佣金代理人中收集的。每个街区都代表着不同的发展水平。结果表明，委托代理人在筛选和监测农民方面投入了大量的时间和资源。在欠发达地区和违约风险较高的地区，审查和监督更为严格。委员会代理人可以将筛选成本的很大一部分转移给借款人，从而增加他们的自我执行范围。该研究认为，高筛查成本伤害了小农户。回归结果发现，筛选策略显著降低了违约率和未收回贷款。JEL分类:D81, E26, Q14

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来源期刊

South Asia Economic Journal Economics, Econometrics and Finance-Economics, Econometrics and Finance (all)

CiteScore

1.10

自引率

0.00%

发文量

期刊介绍： The South Asian nations have progressively liberalized their economies in recent years in an effort to integrate with the world economy. They have also taken steps to enhance multilateral and regional economic integration. Even though the South Asian economies have grown at an average rate of more than 5 per cent over the last few years, roughly 40 per cent of their people still live below the poverty line. Hence, the South Asian region continues to face many challenges of economic and social development. The South Asia Economic Journal (SAEJ) is designed as a forum for informed debate on these issues, which are of vital importance to the people of the region who comprise one-sixth of the world’s population. The peer-reviewed journal is devoted to economic analysis and policy options aimed at promoting cooperation among the countries comprising South Asia. It also discusses South Asia’s position on global economic issues, its relations with other regional groupings and its response to global developments. We also welcome contributions to inter-disciplinary analysis on South Asia. As a refereed journal, SAEJ carries articles by scholars, economic commentators,policy-makers and officials, from both the private and public sectors. Our aim is to create a vibrant research space to explore the multidimensional economic issues of concern to scholars working on South Asia. Among the issues debated in relation to South Asia are: - the implications of global economic trends; - the issues and challenges by WTO; - approaches to industrialization and development; - the role of regional institutions such as the SAARC; - the relationship between SAARC and other regional economic groupings such as ASEAN; - the implications of economic liberalization for trade and investment in the region; - new initiatives that can be launched to enhance economic cooperation among the South Asian countries both on a bilateral and a regional basis.