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Article
Publication date: 4 March 2021

Nguyen Tuan Anh, Christopher Gan and Dao Le Trang Anh

This study simultaneously explores the nexus among formal, semiformal and informal credit markets and farm households' credit demand determinants in Vietnam.

Abstract

Purpose

This study simultaneously explores the nexus among formal, semiformal and informal credit markets and farm households' credit demand determinants in Vietnam.

Design/methodology/approach

This study uses a multistage stratified random sampling process for a survey of 648 smallholder farmers in the Red River Delta (RRD), Vietnam. The trivariate probit model (TVPM) is used to address the interdependence of farm households' credit demands in different credit markets.

Findings

The results reveal complementary relationships among two pairs of credit markets (formal versus informal and semiformal versus informal). There are dissimilarities among the determinants (household characteristics, household head's characteristics, credit history and geographic factors) of farm households' credit demands in different markets, reflecting segmentation of Vietnam credit markets.

Practical implications

The study's empirical findings are important for policymakers and credit providers to enhance farm households' access to credit for agriculture and to improve the operations of the three credit markets.

Originality/value

This is the first empirical study in Vietnam and one of few in other developing countries simultaneously exploring the determinants of credit demand in and interrelationships among all three credit markets to provide more comprehensive and accurate results.

Details

International Journal of Social Economics, vol. 48 no. 5
Type: Research Article
ISSN: 0306-8293

Keywords

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Article
Publication date: 29 November 2018

Tiken Das

The purpose of this paper is to evaluate the rural credit demand by providing a theoretical and econometric framework which controls the problem of selection bias.

Abstract

Purpose

The purpose of this paper is to evaluate the rural credit demand by providing a theoretical and econometric framework which controls the problem of selection bias.

Design/methodology/approach

The study is conducted in Assam, India, and uses a quasi-experiment design to gather primary data. Heckman two-stage procedure and type 3 Tobit model are used to evaluate the rural credit demand.

Findings

It is observed that, in general, rural households’ credit demand is influenced by the ability and capacity to work, the value of physical assets of the borrowers as well as some other lenders’ and borrowers’ specific factors. But, the direction of causality of the factors influencing borrowers’ credit demand is remarkably different across credit sources.

Research limitations/implications

The study recommends that it is possible to provide an efficient credit demand estimate through a correct theoretical and econometric framework. The possible limitation of the study can be due to the exclusion of the role of “traditional community based organizations” in rural Assam while evaluating the credit demand, and therefore, this limitation is left to future research.

Originality/value

The study contributes to the literature by assessing the probable differences among formal, semiformal and informal credit sources with respect to rural credit demand.

Details

International Journal of Emerging Markets, vol. 13 no. 6
Type: Research Article
ISSN: 1746-8809

Keywords

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Article
Publication date: 29 November 2018

Tiken Das

The purpose of this paper is to analyze the determinants of awareness and use of credit sources. The paper attempts to answer the critical question: is awareness of credit

Abstract

Purpose

The purpose of this paper is to analyze the determinants of awareness and use of credit sources. The paper attempts to answer the critical question: is awareness of credit sources prerequisite for their use?

Design/methodology/approach

This study is conducted in Assam, India, and uses a two-stage econometric model to reduce possible selection bias.

Findings

This study argues that awareness of credit sources may be a necessary but not sufficient prerequisite for use. It is found that, in general, formal, semiformal and informal sources attract different classes of the population with respect to economic and social indicators.

Research limitations/implications

The study recommends expanding the scope of semiformal and informal credit sources in rural areas of Assam only for income generating activities with proper market linkages. The possible limitation of the study can be due to exclusion of the role of traditional community-based organizations in rural Assam while analyzing the awareness and use of credit sources.

Originality/value

The study contributes to the literature by assessing the probable differences among formal, semiformal and informal credit sources with respect to their determinants of awareness and use.

Details

Indian Growth and Development Review, vol. 12 no. 1
Type: Research Article
ISSN: 1753-8254

Keywords

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Article
Publication date: 6 August 2018

Tiken Das and Manesh Choubey

The purpose of this paper is to evaluate the non-monetary effect of credit access by providing an econometric framework which controls the problem of selection bias.

Abstract

Purpose

The purpose of this paper is to evaluate the non-monetary effect of credit access by providing an econometric framework which controls the problem of selection bias.

Design/methodology/approach

The study is conducted in Assam, India and uses a quasi-experiment design to gather primary data. The ordered probit model is used to evaluate the non-monetary impact of credit access. The paper uses a propensity score approach to check the robustness of the ordered probit model.

Findings

The study confirms the positive association of credit access to life satisfaction of borrowers. It is found that, in general, rural borrower’s life satisfaction is influenced by the ability and capacity to work, the value of physical assets of the borrowers as well as some other lenders’ and borrowers’ specific factors. But, the direction of causality of the factors influencing borrowers’ life satisfaction is remarkably different across credit sources.

Research limitations/implications

The study argues to provide productive investment opportunities to semiformal and informal borrowers while improving their life satisfaction score. Although the results are adjusted for selection and survivorship biases, it is impossible with the available data to assess which non-income factors explain the findings, and therefore this limitation is left to future research.

Originality/value

The study contributes to the literature of rural credit by assessing the probable differences among formal, semiformal and informal credit sources with respect to non-monetary impacts.

Details

International Journal of Social Economics, vol. 45 no. 8
Type: Research Article
ISSN: 0306-8293

Keywords

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Article
Publication date: 7 September 2018

Tiken Das

The purpose of this paper is to evaluate the impact of credit access on income and multidimensional poverty by providing an econometric framework.

Abstract

Purpose

The purpose of this paper is to evaluate the impact of credit access on income and multidimensional poverty by providing an econometric framework.

Design/methodology/approach

The study is conducted in Assam, India and uses a quasi-experiment design to gather primary data. Econometric tools like Heckit procedure, Tobit selection equation and probit model are used for empirical purpose.

Findings

The paper finds that the level of individual welfare is influenced by equivalent factors. In addition, the study observes a larger incidence of poverty among treatment households of semiformal and informal borrowers. The study argues that formal sources are more effective in reducing the number of poor households by lifting those who are closest to the poverty line.

Research limitations/implications

The study indicates a vicious circle of income and multidimensional poverty among semiformal and informal borrowers. By tradition, as rural Assam gets a dominant role of traditional community-based financial institutions, we should develop the banking structure by involving these institutions. The study excludes other probable explanatory variables while evaluating the impact of credit access on income and multidimensional poverty, and this limitation is left to future research.

Originality/value

This is probably the first empirical paper in Assam showing the impact of credit access on multidimensional poverty by adjusting for endogeneity and selection bias.

Details

International Journal of Social Economics, vol. 46 no. 2
Type: Research Article
ISSN: 0306-8293

Keywords

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Article
Publication date: 5 April 2013

George Mawuli Akpandjar, Peter Quartey and Joshua Abor

The purpose of this paper is to investigate household financial choice and the determinants of financial services in rural and urban households in Ghana.

Abstract

Purpose

The purpose of this paper is to investigate household financial choice and the determinants of financial services in rural and urban households in Ghana.

Design/methodology/approach

Data from the Ghana Living Standard Survey 5 (GLSS 5) are used to estimate the participation of a household in a particular financial sector and what determines this choice.

Findings

The results from Tobit and conditional logit models account for households' demographic characteristics and their financial decisions. The Tobit estimates show that household size, age, sex, marital status, occupation, income, remittances and shocks determine households' participation in the financial markets. Conditional logit model results suggest that locational characteristics are important in obtaining financial services from particular sectors of the financial market. The results also suggest that when the alternatives of financial services are available, rural households are more likely than urban households to obtain their financial services from the informal financial sector.

Originality/value

This current study contributes to the existing literature from the Ghanaian perspective.

Details

International Journal of Social Economics, vol. 40 no. 5
Type: Research Article
ISSN: 0306-8293

Keywords

Abstract

Details

The Impacts of Monetary Policy in the 21st Century: Perspectives from Emerging Economies
Type: Book
ISBN: 978-1-78973-319-8

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Article
Publication date: 25 June 2020

Lan Archer, Parmendra Sharma and Jen-Je Su

A review of literature has documented that accessing formal credit and other banking services has always been a crucial challenge for small and medium-sized enterprises…

Abstract

Purpose

A review of literature has documented that accessing formal credit and other banking services has always been a crucial challenge for small and medium-sized enterprises (SMEs). The alternative, therefore, tends to be informal channels. However, the credit constraint vis-à-vis informal channel link does not appear to be well documented in the literature. This study aims to investigate whether credit constraints significantly affect the probability of accessing informal credit, as well as the credit values of Vietnamese SMEs.

Design/methodology/approach

This study uses a trinary approach and correlated random-effects Probit and Tobit techniques to avoid the incidental coefficients problem.

Findings

The results suggest that relative to unconstrained and partially constrained firms, fully constrained firms tend to be more active in the informal credit markets, shown by their higher probability of informal credit access and larger credit values.

Originality/value

To the best of authors’ knowledge, this is the first study on Vietnam that takes a different approach to credit constraints and examines their impact on informal credit access. Policy implications arise and are discussed.

Peer review

The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-11-2017-0543

Details

International Journal of Social Economics, vol. 47 no. 6
Type: Research Article
ISSN: 0306-8293

Keywords

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Article
Publication date: 3 October 2020

Anjani Kumar, Raya Das, Aditya K S, Seema Bathla and Girish K. Jha

This paper is an attempt to understand the pattern of credit among agricultural households in Eastern India and to identify the correlates of their access to institutional…

Abstract

Purpose

This paper is an attempt to understand the pattern of credit among agricultural households in Eastern India and to identify the correlates of their access to institutional credit for policy imperatives.

Design/methodology/approach

The study uses unit-level data from the All-India Debt and Investment Survey of the 59th and 70th rounds of the National Sample Survey Office for the years 2002–2003 and 2012–2013. Cragg's double-hurdle model and the Heckman selection model are used to estimate the determinants of access to and the amount of institutional loans taken by households. These models also account for potential selection bias in the findings.

Findings

The study reveals that access to credit is strongly associated with the socioeconomic and demographic characteristics of agricultural households. However, about half of the farmers in the eastern states of India lack access to institutional credit despite the government's attempts to include them in the ambit of formal financial services. Thus, strategies for developing agriculture in Eastern India must include efforts to bring small and marginal farmers under the coverage of institutional credit.

Research limitations/implications

These data are based on the responses given by the sample households and not the experimental data. The data pertain to the year 2013.

Originality/value

The findings emphasize that strategies for developing agriculture in Eastern India must give special push to enhance small and marginal farmers' access to institutional credit.

Details

Agricultural Finance Review, vol. 81 no. 2
Type: Research Article
ISSN: 0002-1466

Keywords

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Article
Publication date: 29 August 2008

Mohammad Saleh Torkestani and Pari Ahadi

The purpose of this paper is to assess readiness of Iranian micro‐finance institutes (MFIs) to perform micro‐insurance activities.

Abstract

Purpose

The purpose of this paper is to assess readiness of Iranian micro‐finance institutes (MFIs) to perform micro‐insurance activities.

Design/methodology/approach

A five‐variable model was used. Each variable was assessed using a special dimension of readiness. Row data were gathered through a closed interview containing 34 questions using the Likert scale. Interviewees included 30 experts working as top managers in 15 selected Iranian MFIs (consisting of banks, finance and credit institutes and Qarzol‐hasane).

Findings

The score for general readiness of MFIs in Iran revealed a remarkable figure. Accordingly, it is suggested that these institutes should enter this business field incrementally and invest in this particular domain.

Research limitations/implications

The sample was not truly random, as the professionals in this field are not easily accessible. The factors that were used for the study were based on a review of past researches and the factors were chosen after deliberation and reliability tests. However, this study may not have chosen all possible factors. The research findings are limited to MFIs of Iran. The findings cannot be generalized to other institutions or industries.

Originality/value

The paper reveals the importance of the readiness assessment in successful microinsurance implementation by Islamic MFIs and introduces a basic model for this type of readiness assessment that can be used in other countries.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 1 no. 3
Type: Research Article
ISSN: 1753-8394

Keywords

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