Informal lenders and small/marginal farmers in India: an unregulated sociological symbiotic relationship?

Navjot Sandhu, Javed G. Hussain and Harry Matlay

Chapter 12 in Research Handbook on Entrepreneurial Finance, 2015, pp 206-228 from Edward Elgar Publishing

Abstract: This chapter investigates the relationship between small/marginal farmers and various informal lenders in the Indian Punjab. The authors examine pertinent aspects of lending practices relating to informal providers’ decision-making processes when lending to farmers. The findings indicate that financial lending structures, as well as borrowing decisions, depend largely upon a number of difficult-to-quantify factors such as culture, caste, family size, education, reputation and relational lending practices which are prominent amongst both formal and informal lenders. Informal lenders represent a dedicated and bespoke source of finance, a well-established ‘institution’ for several generations and serve a large population of small/marginal farmers. Hence in order to minimize adverse outcomes and improve access to finance, there is a need to regulate the informal lending sector of India.

Keywords: Business and Management; Economics and Finance (search for similar items in EconPapers)
Date: 2015
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