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The aim of this paper is to study the role of bribery in subsidized credit markets in developing countries. First, the authors use the data to test whether more productive borrowers will pay larger or smaller bribes since the theoretical literature offers conflicting findings regarding the relationship between the size of the bribe and the productivity of borrowers. Second, the authors test whether being eligible to borrow from a microfinance institution affects the frequency or the magnitude of the bribe paid when borrowing from a (non-microfinance) subsidized bank.

The empirical analysis is based on existing theoretical models of bribery. The data set uses publicly available survey data from the Bangladesh Institute for Development Studies. The primary linear model is estimated using OLS. Because left-censoring affects the data, the authors also estimate a Tobit model. Finally, to correct for potential selection bias, the authors also estimate a Heckman selection model.

The authors find that more productive borrowers pay lower bribes than less productive borrowers and that being MFI-eligible affects the frequency of bribery, but not the magnitude of the bribe.

To the authors' knowledge, the paper is the first empirical study of bribery in subsidized credit markets.

In the presence of credit rationing the poor are unable to exploit growth‐promoting opportunities. Using data gathered from a household survey on North China Plain, the purpose of this paper is to find pervasive rationing in the highly regulated formal credit market in rural China. The subsidized credit policies favor local elites instead of the targeted poor strata and earmarked credit programs are less effective. By jointly estimating credit rationing in both the formal and informal sectors, this paper elaborates on the fragmented rural credit market in China where different borrower segments are systematically sorted out across different loan types. Non‐targeted credit programs cannot address income redistribution or sustainable poverty reduction in the presence of such skewed equality and equity.

The basis of this study is a multi‐topic household survey data on rural households in the North China Plain, with 337 rural households being randomly sampled out of five purposely selected counties. The particular objectives are to identify the determinants of credit rationing in both formal and informal sectors, to show the extent of credit rationing by using Probit model, to explore the substitutability of institutional and informal lending by using bivariate probit specification.

First, there exists pervasive rationing in the highly regulated formal credit market in rural China. Second, the subsidized credit policies favor local elites, instead of the targeted poor strata; and the earmarked credit programs are less effective. Third, informal credits, in a form of reciprocal arrangement, are weak substitutes for institutional loans. Different segments of borrowers are systematically sorted out across different loan types; the rural credit market is fragmented. Fourth, government‐led credit programs are not effective in promoting agricultural investments; credits of rural non‐farm activities facilitate agricultural transformation.

Since 2004, the policymakers in China initiated a set of policies towards promoting agricultural and rural development to spur the rural economy and ease tensions in rural area. Credit policies, believed often to be efficient and guided tools to provide financing to investors, gained a great deal of appeal. Given the widely existing failure of government‐driven rural credit programs in many other developing countries, how the interventions affect the rural economy in China should be investigated. However, little has been done to explore the interventions on smallholder farmers and the existing evidence is therefore pieced and anecdotal. This paper aims to fill that gap.

Access to finance is an important condition for the development of agriculture and the farms’ performance. The purpose of this paper is to analyse the association between the technical efficiency of horticultural farms and access to finance from different finance providers.

Data were collected from 434 farmers who produce mango, mangosteen, chili and red onion in Indonesia. Data were subsequently analysed using data envelopment analysis and bootstrap truncated regression.

The results show that commercial credit from banks and in-kind finance provided through farmers’ associations have a positive association with the technical efficiency of some types of horticultural farms. Commercial credit from micro finance institution and flexible payment of inputs to the agricultural input kiosk generally have negative associations, especially with the technical efficiency of mangosteen farms. Subsidised credit from banks and in-kind finance from traders have both positive and negative associations with the technical efficiency of the horticultural farms.

This study adds to the existing literature by analysing access to finance from a broader range of finance providers and its relation to technical efficiency.

To provide a deep understanding of success factors contributing to a micro‐finance institution (MFI) in a developing country, e.g. Bank Rakyat Indonesia (BRI) and how MFI in developing country might learn from this success.

This is a case study research which took place at BRI branches as well as its village units (unit desa). Data were gathered from both sides, e.g. from BRI and borrowers. The interviews, raging from in depth interviews to semi‐structured interviews, were conducted in Jakarta and some rural cities mainly in Java and South Sulawesi between August and September 2003.

Factor contributing to the success of BRI lay on the decision to keep adapting its practice with environmental changing. Also BRI is very innovative in choosing collaterals so in one hand, the credit is still interesting for lower class community, but at the same time they work as compensation in case the clients fail to repay their credit and thus ensuring the sustainability of the MFI. Well‐trained and dedicated staffs operating a simple, transparent system, clear incentives to staffs and clients, tight internal supervision and audit capacities and financial procedures and sound financial risk management contributes to its success as well.

The case study took place in a developing country, in Indonesia. Given that any developing country has unique environment and circumstances, this success model will not automatically transferable to any MFI in other developing countries. Any further research is needed to transfer BRI success elsewhere.

A useful lesson learnt for national/international development agent which wants to set up a sustainable MFI to assist the poor and alleviating poverty.

This is the first time that the investigation also took place on BRI village units in South Sulawesi, one of the most successful operational area of BRI village units. Thus, the implication of this research is true reflection of the success of BRI village units.

Lack of access to credit is commonly held responsible for slow agricultural and rural development in low- and middle-income countries. This paper aims to investigate the contribution of demand- and supply-side factors, particularly the role of risk rationing, on credit application and uptake in the case example of Kyrgyzstan.

Toward this aim, the study explores the determinants of credit behavior of 1,738 Kyrgyz sample farm households from 2013 to 2016 waves of the nationally representative “Life in Kyrgyzstan” (LIK) dataset along a hierarchical regression model, differentiating between factors influencing individual demand for credit and factors influencing supply for credit.

The results of our analysis indicate the relative importance of demand-side factors for credit applications, reflecting farmers' perceived risk of credit default and loss of collateral. Meanwhile, supply-side factors, such as real credit constraints and collateral requests, have a stronger influence on credit uptake rates and overall loan sums. These findings highlight the role of risk rationing for agricultural investment, suggesting a stronger focus of development policy on improving risk-sharing mechanisms for farmers, e.g. by developing the agricultural insurance sector.

The paper contributes novel evidence on the role of risk rationing in shaping the demand for formal credits for increasing agricultural and rural investment in low-income transition economies. Previous research has mostly focused on the role of credit supply, thus underrating the potential contribution of individual risk attitude, risk experience and risk sharing.

The purpose of this paper is to present a discussion on the idea of “policy rationing”. Policy rationing refers to constraining impacts on farm credit through policy action or inaction. To present the ideas the author discusses ten themes in policy rationing, ranging from macro‐finance policies to smart lending and financial inclusion.

The paper is developed as a narrative on agricultural credit policies based largely on existing literature.

This paper argues that the various critiques of rural credit policy in favor of free market principles have generally not worked in developing economies. Large numbers of farmers do not have access to formal credit. It is argued that there is a role for government and credit programs.

The opinions expressed in this paper are based on existing literature and not all ideas hold with general agreement across researchers and practitioners. The discussion is not exhaustive and in some cases the ideas might have been parsed further.

In this paper the author discusses ten themes that he thinks are relevant for a balanced discussion of farm credit in a development context. These themes illustrate a variety of complexities with respect to rural credit policy. The author ends by restating the themes in the form of ten questions that should be asked in whole, or in part, before any farm credit policy is field‐implemented.

This paper deals with a broad range of issues on rural credit policy. It is directed towards a reformation of ideas about credit policy, especially in developing economies. It is argued that, all things considered, on balance there is a role for government in rural credit policy.

There is much discourse amongst development economist about the role of government and credit policy in agricultural development. By thinking of government action or inaction as a form of policy rationing, some clarification is brought to the policy debate.

Domestic supports on Turkish agriculture have substantially increased over the past decade while empirical evaluation of their output impact is limited. Also, the existing literature often neglects potential spatial spillover effects of agricultural policies or subsidies. The purpose of this paper is to quantify the direct and spillover effects of Turkish agricultural domestic measures and agricultural credits use on the added agricultural value.

This study applied a spatial panel model incorporating spatial interactions among the dependent and explanatory variables to evaluate the impact of government support and credit on Turkish agricultural output. A provincial data set of agricultural output values, input factors and government subsidies from 2004 to 2014 was used to model the spatial spillover effects of government supports.

Results show that a one percent increase in agricultural credits in a given province leads to an average increase of 0.17 percent overall in agricultural value-added per hectare, including 0.05 percent from the direct effect and 0.12 percent from the spillover effect. Contrary to agricultural credits, a one percent increase in government supports in a province generates a mixed direct and spillover effects, resulting in an overall reduction of 0.13 percent in agricultural value-added per hectare in Turkey.

This study could be extended by controlling for climate, biodiversity and investment factors to agricultural output in addition to input and policy factors if such data were available.

This study fills the gap in the literature by determining the total effect, including direct and spatial spillover effect, of domestic supports and credits on Turkish agricultural value. The findings provide crucial information to decision makers regarding the importance of incorporating spatial spillover effects in the design of agricultural policy.

This paper aims to study the problems faced by microfinance institutions (MFIs) and relates it with Al-Tawhid to see the solutions.

An exploratory method was used to examine various literature that discuss MFIs, the challenge issues growing in tandem with the growth of the microfinance sector and the economic order of MFIs and tries to link it to Al-Tawhid.

The absence of Al-Tawhid concept in the practice of conventional MFIs caused the practices are not acceptable to Muslim micro entrepreneurs. Hence, the use of Al-Tawhid principles of contract suggested practices that are fair and free from elements of riba and gharar. It relates to the economics order by looking into the aims of providing finance up to reaching the consensus process or shuratic. Cash waqf is suggested as a source of fund for Islamic MFI for sustainability.

The findings need to be supported with empirical study to come up with suitable models.

Alternative sustainable source of funds for the Islamic MFI is suggested.

Activating the cash waqf will involve the society in large to contribute to the economic development. The beneficiaries, such as the poor and needy, will be able to find a source of living and be actively involved in generating income activities.

This paper highlights the cause of problems faced by conventional microfinance and relats the Al-Tawhid to overcome those problem conceptually.

The purpose of this paper is to determine whether the evolution of industry structure in the World Bank’s eight high performing Asian economies (HPAEs) displays the U-shaped relationship between manufacturing concentration and per capita income widely held to foster economic development. Increasingly prosperous HPAEs have long been hailed as models for success by other emerging economies. Focusing on a regional group of high performing economies enables us to relate policies used by successful HPAEs directly to observed patterns of manufacturing diversification and provide policy guidance to emerging economies.

A robust locally weighted scatterplot smoothing procedure is employed to generate the U-shaped relationship between manufacturing concentration and level of economic development. Policies used by the most successful HPAEs are discussed.

The relationship between manufacturing concentration and level of economic development is found to be U-shaped. Diversification of manufacturing is a prerequisite for successful economic development. Countries further along the economic development path such as Japan, South Korea, and Taiwan made extensive use of active and selective interventionist policies to diversify manufacturing before eventually specializing in a narrower range of export activities.

Emerging economies should follow examples set by the most successful HPAEs that demonstrated significant government assistance is required to foster economic development.

The paper is the first to investigate the evolution of manufacturing concentration over the economic development path HPAEs. Success enjoyed by HPAEs holds important lessons for developing and emerging economies.

The purpose of this paper is to examine the factors that influence farmers' preference for the use of Islamic banks in Turkey and to investigate their knowledge level and perception about Islamic finance.

Survey data used in this study is obtained by drawing a sample of 1902 farmers who are members of the Agricultural Credit Cooperatives Union (ACCU) from 37 provinces of Turkey. Pearson's Chi-square test is used to analyze the association between the demographic features of farmers, conventional bank usage and Islamic bank usage. Binary logistic regression model is used to estimate the factors influencing the preference for Islamic banks. Explanatory variables include knowledge on Islamic banking and finance, perception of compliance to religion, saving ability and cost concern along with the control variables of Islamic bank branch number in the region and age of respondent. Robustness check is conducted via alternative models using ordinary least squares (OLS) and logistic regression.

Less than 10% of the participant farmers use Islamic banks and 59% declare they know nothing about Islamic banking. Age, education level, income level, nonagricultural income level, saving ability, duration of working in agriculture, land size and region are significantly related to farmers' preference of using Islamic banks. Knowledge level, perception of religious compliance, saving ability and cost concern are statistically significant factors that influence the probability of using Islamic banks.

This study does not include the analysis of the relationship between being religious and using Islamic banks because questions related to the assessment of religious practice were excluded due to the ACCU's sensitivity to investigate personal beliefs. Therefore, future studies can expand the scope of this research by investigating religiousness. The sample is chosen from the ACCU members who are already benefiting from a formal source of credit; therefore, the results should not be attributed to all farmers.

Islamic banks and microfinance institutions' further engagement in the agricultural sector and ACCU's implementation of Islamic finance instruments.

Islamic banks' further diversification in the agricultural sector and ACCU's implementation of Islamic finance instruments.

To the best of the authors' knowledge, this paper is the first to investigate the farmers' perception and preference of Islamic banking in Turkey. The sample size of 1902 is much larger and geographically diversified compared to studies in agricultural finance. This study will be valuable for the agricultural finance empirical studies in Turkey as well as an important addition to the emerging literature on Islamic finance.