Interest Rates in Backward Agriculture: The Role of Economic and Extra-Economic Control

Kailas Sarap

Cambridge Journal of Economics, 1990, vol. 14, issue 1, 93-108

Abstract: This paper examines the nature and roles of personalized control exercised by the rural moneylender over a class of poor borrowers to extract as much as possible in the form of high interest charges and income from undervalued and/or forfeited collaterals. Based on primary survey data from rural India, it analyzes the strategies adopted by the lender, through economic and extra-economic instruments, to enforce the credit contracts to accomplish his goals. It also provides a vivid picture of the variations in the level of interest rates and the reasons for it across a class of borrowers in the sample. Copyright 1990 by Oxford University Press.

Date: 1990
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