Collateral and other Forms of Guarantee in Rural Credit Markets: Evidence from Eastern India

Kailas Sarap
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Kailas Sarap: Maharishi Dayanand University

Indian Economic Review, 1991, vol. 26, issue 2, 167-188

Abstract: This study uses original survey data from six villages in Orissa, India to identify and analyse the system of guarantee prevalent in informal sector markets with diverse socio-economic conditions. The survey data reveal that the system of guarantee available to the lenders is much more complex and diverse than assumed in the theoretical literature. The money lender, through a variety of guarantee systems including collateral requirement and personal relationship, is in a position to screen and monitor the borrowers with negligible cost so that there is hardly any risk of default.

Date: 1991
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