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An analysis of transaction costs of Islamic banks in rural Iran
Author(s) -
Hosseini S. Safdar,
Khaledi Mohammed,
Gray Richard
Publication year - 2009
Publication title -
agribusiness
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.57
H-Index - 43
eISSN - 1520-6297
pISSN - 0742-4477
DOI - 10.1002/agr.20211
Subject(s) - econlit , transaction cost , business , islam , database transaction , economics , finance , political science , computer science , law , programming language , philosophy , theology , medline
This study measures transaction costs of obtaining credit from Islamic banks. Data were collected from rural households in Iran. The factors affecting transaction costs and the probability of accessing Islamic financial markets are investigated. Similar to conventional financial institutions found in other developing countries, Iranian banks impose high transaction costs that limit poor rural household access to credit. The results reveal that the transaction costs of gaining credit are on average equivalent to an additional 13.8% annual interest cost. The contractual form, the size of credit, the borrower distance from a financial center, and the experience and education level of the borrower are important determinants of the transactions costs. [EconLit Citations: D230, R510, G210]. © 2009 Wiley Periodicals, Inc.