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Rural Financial Market Performance: Implications of Low Delinquency Rates
Author(s) -
Vogel Robert C.
Publication year - 1981
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1239811
Subject(s) - juvenile delinquency , incentive , interest rate , business , developing country , agriculture , carry (investment) , economics , finance , economic growth , market economy , geography , psychology , archaeology , psychiatry
In contrast to most developing countries, nonrepayment of agricultural loans has not been a problem for the Costa Rican banking system. Delinquency rates have in fact been lower for agricultural than nonagricultural loans and lowest on loans to small farmers. This good performance is due largely to efficient techniques developed for gathering information about potential borrowers and incentives for borrowers to repay promptly to maintain access to bank loans which carry interest rates substantially below equilibrium. The pattern of low delinquency rates reflects the structure of low interest rates which causes farmers, especially small farmers, to be rationed most severely.