Segmentation in rural financial markets: the case of Nepal uri icon

abstract

  • Based on a farm household survey in Nepal, this study found that farm size and irrigation are major determinants of borrowing from formal institutions, whereas family size is the most decisive factor in borrowing from informal sources. Formal sector borrowing per hectare of cultivated area, however, initially increases and then decreases with farm size. Our analysis indicates that while very small farmers tend to be excluded from the formal financial market because of a lack of collateral, very large farmers choose to borrow less from that source because of lower production efficiency.

publication date

  • 1992
  • 1992
  • 1992