INTEREST RATE POLICIES AND BORROWING COSTS IN RURAL FINANCIAL MARKETS

Carlos E. Cuevas and Douglas H. Graham

No 279219, 1982 Annual Meeting, August 1-4, Logan, Utah from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: Hidden costs are an important feature of credit transactions in rural financial markets of lesser developed countries. There is frequently a trade-off between explicit interest charges and implicit borrowing costs such that smaller borrowers experience relatively greater borrowing costs than larger borrowers in a low, subsidized interest rate setting. - Implicit interest and explicit interest are found to be perfect substitutes, and lending institutions exercise loan rate differentiation through implicit charges to borrowers. Changes in the explicit interest rate have a differential impact by loan size.

Keywords: Agricultural Finance; Demand and Price Analysis; Marketing (search for similar items in EconPapers)
Pages: 27
Date: 1982-08
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea82:279219

DOI: 10.22004/ag.econ.279219

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