Micro-credit Programs and Land Distribution: A Note

Munirul Nabin and Gautam Bose

Economics Bulletin, 2006, vol. 15, issue 9, 1-7

Abstract: "Micro-credit" has come to refer to a popular extension strategy -usually in the agricultural sector -whereby a government or NGO extends credit at favorable rates to poorer borrowers, with repayment being supported by some kind of mortgage on the borrower's social capital. In the commonest case, eligibility is determined by the borrower''s wealth, as indexed by his/her landholding. This note shows that, with an imperfect land market, the response to such a program will be to fragment landholdings which are smaller than a certain threshold, while larger holdings remain unaffected. Thus the pattern of landholding will tend to become more polarized.

Keywords: land; fragmentation; and; polarization (search for similar items in EconPapers)
JEL-codes: O1 (search for similar items in EconPapers)
Date: 2006-09-08
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