occupational choice and the process of development this paper models economic development as a process of institutional transformation by focusing on the interplay between agents occupational decisions and the distribution of wealth because of capital market imperfections poor agents choose working for a wage over self employment and wealthy agents become entrepreneurs who monitor workers only with sufficient inequality however will there be employment contracts otherwise there is either subsistence or self employment thus in static equilibrium the occupational structure depends on distribution since the latter is itself endogenous we demonstrate the robustness of this result by extending the model dynamically and studying examples in which initial wealth distributions have long run effects in one case the economy develops either widespread cottage industry self employment or factory production employment contracts depending on the initial distribution in the other example it develops into prosperity or stagnation

a deterministic inventory model for deteriorating items with stock dependent demand rate abstract a deterministic inventory model is developed by assuming that the demand rate is stock dependent and the items deteriorate at a constant rate the expression for the average net profit over one production run is derived and its optimization with respect to the decision variables q initial stock and t duration of a production cycle is carried out this leads to two highly nonlinear equations which are solved by using a subroutine neqnf in imsl math library in cyber 180 480a computer system the optimal solution so derived is compared with that for the no deterioration 0 case sensitivity of the optimal solution to changes in parameter values is examined several aspects of the functional form for the demand rate are considered in a separate section finally the salient features of the problem and its solution are discussed in brief

the microfinance promise in the past decade microfinance programs have demonstrated that it is possible to lend to low income households while maintaining high repayment rates even without requiring collateral the programs promise a revolution in approaches to alleviating poverty and spreading financial services and millions of poor households are served globally a growing body of economic theory demonstrates how new contractual forms offer a key to microfinance success particularly the use of group lending contracts with joint liability for the most part however high repayment rates have not translated into profits and studies of impacts on poverty yield a mixed picture in describing emerging tensions the paper highlights the diversity of innovative mechanisms beyond group lending contracts the measurement of financial sustainability the estimation of economic and social impacts the costs and benefits of subsidization and the potential to reduce poverty through savings programs rather than just credit the promise of microfinance has pushed far ahead of the evidence and an agenda is put forward for addressing critical empirical gaps and sharpening the terms of policy discussion

why are informal loans still a big deal evidence from north east thailand abstractthis article examines the use and benefit of informal loans for different income groups of rural households in north east thailand using a difference in differences estimation approach which is later complemented by propensity score matching the article shows that different household groups profit from informal loans in different ways poor households increase their asset endowment and in particular farming assets whereas rich households food consumption rises especially if households borrow due to a shock by showing that informal loans serve different households for different purposes this article provides an explanation why they still play an important role

optimal economic ordering policy with deteriorating items under different supplier trade credits for finite horizon case abstract this paper develops and solves a general finite horizon trade credit economic ordering policy for an inventory model with deteriorating items under inflation and time value of money when shortages are not allowed the time horizon is divided into different cycles each of which has its own demand rate and its own trade credit period offered from the supplier to his retailer so that the retailer should pay his supplier before or after the end of the permissible trade credit of that cycle up to the end of the trade credit of a cycle the retailer is free of charge but he is charged on an interest for those items not being sold before this end the retailer can also earn the interest of the money from the generated sales revenue in any cycle by depositing such revenue into an interest bearing account the objective of the retailer is then to minimize his net total relevant costs a closed form of this net total cost is derived and the resulting model is solved then rigorous mathematical methods are used to show that under some seemingly possible conditions there exist a unique vector of the relevant decision variables that solve the underlying inventory system a numerical example which shows the applicability of the theoretical results is given

moneylenders and informal financial markets in malawi abstract after a background review of the institutional financial srvices available to small and medium enterprises in malawi and a survey of the literature on malawi s informal financial markets ifms this paper presents a detailed report on the character and operations of a katapila moneylender in lilongwe malai the moneylender market is then analyzed in terms of several themes from the literature on ifms in less developed countries for example calculations show that the interest charges on katapila loans are not justified by economic costs of doing business finally policy implications for promoting more efficient finance are discussed

an empirical investigation of rationing constraints in rural credit markets in india abstract the literature on rural credit markets has generally assumed that households are rationed in their access to subsidized formal credit the validity of this assumption depends on the level of effective demand for formal credit in turn a function of the demand for credit and its availability from informal sources this paper estimates the demand and the sector specific costs of credit and hence the extent of formal sector rationing through an analysis of household participation in both the formal and the informal credit sectors the results show that the extent of rationing is considerably less than what is conventionally assumed

monetary policy and bank lending in developing countries loan applications rates and real effects abstract recent studies of monetary policy in developing countries document a weak bank lending channel based on aggregate data in this paper we bring new evidence using uganda s supervisory credit register with microdata on loan applications volumes and rates coupled with unanticipated variation in monetary policy we show that a monetary contraction reduces bank credit supply increasing loan application rejections and tightening loan volume and rates especially for banks with more leverage and sovereign debt exposure there are associated spillovers on inflation and economic activity including construction permits and trade and even social unrest

interaction between the formal and informal financial sectors the asian experience abstract the nature of the interaction between the formal and informal financial sectors in developing countries is a subject with important policy implications it has implications for the future of informal finance as the formal sector expands in the long term will the informal sector wither away as the traditional view of financial dualism assumes or will it continue to play an important complementary role perhaps even growing in absolute size second the pattern of two major policy approaches often advocated toward the informal sector offering it stronger competition so as to induce it to improve its terms and promoting linkages with it so as to take advantage of its lower transactions costs in reaching smaller and poorer borrowers third the existence of a large informal sector has implications for the efficacy of monetary and credit policy in achieving stabilization objectives fourth the interaction between the formal and informal financial sectors also has implications for the effects of financial liberalization through removing restrictions on the deposit rate of interest this paper draws on the experience of asian countries to address these issues

simple analytics of segmented markets what case for liberalization abstract discussion about the liberalization of controlled markets in developing countries frequently assumes that the removal of price or quantity restrictions will lead rapidly to increased marketed output however when parallel markets exist market controls may not depress marketed output and may actually increase it conversely liberalization may not increase marketed output much if at all the benefits of liberalization will be greater where parallel markets are costly to enter so that decontrol increases efficiency and scarce resources such as entrepreneurial and administrative ability are diverted into the rent seeking activity of gaining access to illegal parallel markets this paper employs partial equilibrium techniques to analyze market controls and liberalization in the presence of parallel markets for foodgrains credit labor and foreign exchange

the role of subsidies in microfinance evidence from the grameen bank the grameen bank of bangladesh has been in the vanguard of the microfinance movement showing the potential to alleviate poverty by providing credit to poor house holds part of this success has been built on subsidies in 1996 for example total subsidies evaluated at the economic opportunity cost of capital amounted to about us 26 30 million the evidence helps to explain why institutions like grameen have not just sprung up on their own as private commercial ventures and it underscores the value of openly addressing the costs and benefits of subsidization the paper also describes recent difficulties in maintaining high repayment rates q 1999 elsevier science b v all rights reserved

an inventory model for deteriorating items with stock dependent consumption rate and shortages under inflation and time discounting this paper derives an inventory model for deteriorating items with stock dependent consumption rate and shortages under inflation and time discounting over a finite planning horizon we show that the total cost function is convex with the convexity a simple solution algorithm is presented to determine the optimal order quantity and the optimal interval of the total cost function the results are discussed with a numerical example and particular cases of the model are discussed in brief a sensitivity analysis of the optimal solution with respect to the parameters of the system is carried out

the optimal cycle time for epq inventory model under permissible delay in payments abstract goyal journal of the operational research society 36 1985 35 38 discusses the economic order quantity under conditions of permissible delay in payments an implicit assumption of goyal journal of the operational research society 36 1985 35 38 is that the items are obtained from an outside supplier the entire lot size is delivered at the same time if we wish to adopt all results obtained by goyal journal of the operational research society 36 1985 35 38 then we are effectively assuming that the replenishment rate is infinite the main purpose of this paper is to extend goyal journal of the operational research society 36 1985 35 38 to the case that the units are replenished at a finite rate when the replenishment rate approaches to infinite goyal journal of the operational research society 36 1985 35 38 will be a special case of this paper

probabilistic time scheduling model for an exponentially decaying inventory when delays in payments are permissible abstract a probabilistic time scheduling model is developed for an exponentially decaying inventory when the supplier offers some credit period t for settling the accounts for the purchase quantity the credit period t is known constant mathematical models are derived for both the cases i t t and ii t t expressions are derived for the total average expected cost of the system the optimum cycle time and the time for obtaining optimum order levels s s0 under each case the model is illustrated in two particular forms

strategic interaction in undeveloped credit markets abstract this paper studies the strategic interaction between informal and formal lenders in undeveloped credit markets in a model with adverse selection loan seniority market power and differences in the cost of lending it is shown that under general conditions a co funding equilibrium will be a nash outcome of the game we demonstrate that a collateral requirement in connection with formal loans always generates a new co funding equilibrium in which both lenders earn higher profits a government subsidy to the formal lender may have the opposite effect we relate our results to existing empirical evidence and the emerging discussion of how to best ensure financial viability and outreach of microfinance institutions

expanding microfinance in brazil credit utilization and performance of small firms abstract we take advantage of the natural experiment generated by the exogenous change in government policy towards microcredit to evaluate the impact of the increased supply of microcredit on the utilisation of credit by micro entrepreneurs based on micro entrepreneurs survey and administrative data from a microcredit programme in brazil we show that the increased supply of microcredit raised formal credit utilisation and this does not crowd out the use of informal credit sources formal credit taking improves business performance and returns are larger for women than for men owned firms but males employ significantly more workers after taking formal credit than females

optimal ordering policy for stock dependent demand under progressive payment scheme abstract in this article a mathematical model is developed to formulate optimal ordering policies for retailer when demand is partially constant and partially dependent on the stock and the supplier offers progressive credit periods to settle the account the notion of progressive credit period is as follows if the retailer settles the outstanding amount by m the supplier does not charge any interest if the retailer pays after m but before second period n offered by the supplier then the supplier charges the retailer on the un paid balance at the rate ic 1 if the retailer settles the account after n then he will have to pay at interest rate ic 2 on the un paid balance ic 2 ic 1 the cost minimization is considered to be an objective function an algorithm is given to find the flow of optimal ordering policy a numerical illustration is given to study the effect of various parameters on ordering policy and total cost of an inventory system

informal credit markets in india informal financial markets those which are not regulated or monitored by the banking authorities account for much of business credit in developing countries these unregulated informal credit markets icm are important both in their own right as part of each country s financial system and because of their reciprocal relations with growing enterprises and the regulated financial sector in order to study the operations of some of these markets in detail in urban commercial settings we conducted an extended survey of some of the informal credit markets of india 2 based in some cases on centuries of operation these markets proved to be important in the functioning of the contemporary economy indigenous style bankers belonging to particular ethnic communities and castes formerly provided the full range of banking services to their clients 3 with the rise of modern western style banking the indigenous bankers either have transformed themselves to serve sectors such as wholesale trade not well served by the modern sector or provide services which the modern bankers cannot provide though any estimate is very approximate it seems that informal credit markets account for as much as 20 of commercial credit outstanding in the various markets surveyed we began by surveying the gujeratis some of whom still practice their traditional form of full service banking in their homeland of gujerat and adjoining bombay the shikarpuris or multanis originally full service bankers in sind who now provide commercial credit in various other centers the chettiars in south india the rastogis in uttar pradesh and the marwaris especially in eastern india 4 but our surveys revealed that a wide range of ethnic groups were now involved in informal credit markets and the more meaningful differentiations

symbiosis vs crowding out the interaction of formal and informal credit markets in developing countries abstract it is a common observation in many developing countries that enterprises are active borrowers in both formal and informal credit markets we propose a model in which the formal sector s superior ability in deposit mobilization is traded off against the informational advantage that lenders in the informal sector enjoy the formal sector can screen borrowers by providing only partial financing for projects thereby forcing borrowers to resort to the informal sector for the remainder of the loan we use the model to predict how the market structure responds to changes in the environment and we consider the policy implications of various forms of government intervention

a disequilibrium model with smooth regime transitions and a keynesian spillover for switzerland s labor market abstract this paper presents a disequilibrium labor market model in which aggregation over a continuum of micro markets with different demand supply ratios produces smooth macro relationships mapping aggregate demand and supply onto actual employment and regime proportions aggregate labor demand consists of a classical part derived on a putty clay assumption and a keynesian spillover from the goods market the specification of labor supply incorporates intertemporal substitution the degree of aggregate imbalances on labor and goods markets is measured by business survey data the estimated model indicates a growing mismatch between the micro structures of demand and supply of labor the short run fluctuations of employment are primarily traced back to the keynesian spillover classical determinants of labor demand are relevant as well but only in the medium term labor supply is rather inert and thus absorbs the swings of labor demand only partly

credit markets in northern nigeria credit as insurance in a rural economy this article addresses the issues of imcomplete markets and imperfect information in the context of credit markets in rural northern nigeria in much recent theoretical literature the problems of moral hazard and adverse selection are assumed to be decisive for the organization of agrarian institutions in contrast it is found that in the four villages surveyed credit transactions take advantage of the free flow of information within rural communities information asymmetries between borrower and lender are unimportant and their institutional consequences the use of collateral and interlinked contracts are absent credit transactions play a direct role in pooling risk between households through the use of contracts in which the repayment owed by the borrower depends on the realization of random production shocks by both the borrower and the lender

do village funds improve access to finance evidence from thailand summary this paper examines whether recently introduced village funds one of the largest microfinance programs ever implemented improve access to finance village funds are analyzed in a cross sectional approach in comparison to competing financial institutions we find first that they reach the target group of lower income households better than formal financial institutions second village funds provide loans to those kinds of borrowers who tend to be customers of informal financial institutions third village funds help to reduce credit constraints thus village funds provide services in the intended direction albeit to a seemingly limited degree

an eoq model with partial backordering and advance payments for an evaporating item abstract in the classic economic order quantity model the purchasing cost of an order is paid at the time of its receipt in some cases retailers ask purchasers to pay all or a fraction of the purchasing cost in advance and may allow them to divide the prepayment into several equal sized parts in this paper an economic order quantity model for an evaporating item with partial backordering and partial consecutive prepayments is developed with a real case study of a gasoline station real numerical examples illustrate the proposed model and the solution method

inventory models with inventory level dependent demand a comprehensive review and unifying theory marketing researchers and practitioners have long recognized the demand of many retail items is proportional to the amount of inventory displayed recently two distinct types of inventory control models reflecting this relationship have appeared in the literature models in which the demand rate of an item is a function of the initial inventory level and those in which it is dependent on the instantaneous inventory level we present a comprehensive overview of this literature and demonstrate the equivalence of the two types of models through the use of a simple periodic review model an alternative approach to sensitivity analysis for inventory models with inventory level dependent demand is also presented

parallel fragmented or black defining market structure in developing economies abstract in describing market structure development economists employ such terms as fragmented informal parallel and segmented to account for the observed distributions of prices of both goods and factors although these terms are used interchangeably do they mean the same thing focusing on the parallel markets approach the paper identifies government policies which create excess demand or supply in particular markets as the core determinant of the emergence of an official unofficial market structure the legality of unofficial transactions proves critical in assessing the consequences of the parallel market situation contrasting alternative characterizations of market structure the paper concludes that the parallel market is a distinct analytical concept

exclusion competition and regulation in the retail loan market abstract exclusion of borrowers from credit markets became a primary concern for regulators during the recovery from the recent recession the paper analyzes loan making institutions that set both interest rates and minimum credit requirements we propose analytical measures of the degree of borrower exclusion from receiving loans we analyze five market structures single lender regulated interest rate entry interest rate discrimination and highly competitive lenders interest rate regulation improves total welfare relative to a single lender market however entry of a second lender reduces exclusion and generates higher total welfare in the absence of fixed costs perfect and bertrand competition are optimal

corporate borrowing and credit constraints structural disequilibrium estimates for the u k this paper develops a structural model of the market for corporate borrowing in the united kingdom the authors allow trade to be dispersed across a number of submarkets and suppose that disequilibrium operates at this disaggregated level solving for the level of aggregate trade they can estimate nonlinear equations for the demand and supply of borrowing and for the associated interest rate the authors use survey data to measure the strength of spillover from other markets the estimates reveal that disequilibrium has had substantial effects the authors also obtain interesting and plausible estimates for the parameters of the behavioral equations copyright 1990 by mit press

gender biases in bank lending lessons from microcredit in france the evidence on gender discrimination in lending remains controversial to capture gender biases in banks loan allocations we observe the impact on the applicants of a microfinance institution mfi and exploit the natural experiment of a regulatory change imposing a strict eur 10 000 loan ceiling on microcredit descriptive statistics indicate that the presence of the ceiling is associated both with bank mfi co financing and with harsher treatment of female borrowers to investigate causal links we develop an econometric approach that addresses the concerns of selection biases multicollinearity and endogeneity our empirical findings suggest that the change in the mfi s gender related attitude was triggered by banks through co financing hence we speculate that co financing pushes ceiling constrained mfis to import whatever biases in loan granting that the banks are prone to overall this paper stresses that apparently benign regulations such as loan ceilings can significantly harm the women s empowerment efforts made by mfis

the use of village agents in rural credit delivery using a simple principal agent model this article examines the incentive problems that arise when a formal financial institution such as a rural bank utilises a member of the rural community to act as an agent in screening potential borrowers and collecting repayment optimal compensation schemes are derived for the agent and their implications are discussed in addition i show that the norms and rules that govern village life may aid the financial institution by helping to constrain possible strategic behaviour by the agent

the eoq models modified by introducing discount of purchase price or increase of setup cost abstract the eoq model of inventory problem can determine ordering cycle and quantity when the purchase unit price is constant ordering cycle and ordering quantity which minimize the one day s average inventory cost is not dependent on the purchase price but if purchase price may change the eoq model must be modified the purchase unit price is discounted as the ordering becomes larger the discount of purchase price is described with a decreasing function of ordering quantity this function is not always continuous with respect to the ordering quantity under this condition one day s average profit can be defined and we can determine ordering cycle and ordering quantity which maximize one day s average profit moreover we consider the situations under which the setup cost depends on the ordering quantity in this case the setup can be described with the increasing function of ordering quantity we show that the eoq model can be applied if it is modified by introducing the continuous setup cost function this function is not differentiable at some levels of ordering quantity

a periodic review model with serially correlated inventory level dependent demand abstract it has been established that the demand rates of many consumer products are serially correlated and are dependent on the amount of inventory displayed to the customer a periodic review model is developed that considers both of these effects an adaptive base stock policy based on the critical fractile is presented and a solution methodology is developed the effect of this demand pattern on the safety stock requirement is investigated

microfinance and moneylender interest rate evidence from bangladesh summary the linkage between the formal and informal credit markets in developing countries has largely been unexplored this paper addresses one important aspect of the linkage by empirically investigating the impact of the intervention of microfinance programs on the moneylender interest rates in northern bangladesh and finds that moneylender interest rates increase with microfinance program coverage higher microfinance program coverage increases moneylender interest rates in the villages in which more loans are invested in productive economic activities than consumption borrowers resort to moneylenders for additional funds probably because of inadequate supply unavailability of seasonal working capital from mfis and tight repayment schedules which in turn increase demand for moneylender loans

moral hazard and nonmarket institutions dysfunctional crowding out or peer monitoring the authors examine a situation in which insurance is characterized by moral hazard when market insurance is provided supplementary mutual assistance between family and friends unobservable to market insurers will occur when nonmarket insurers have no better information than market insurers the mutual assistance not only crowds out market insurance but is also harmful and therefore dysfunctional alternatively when nonmarket insurers can observe each other s effort perfectly mutual assistance is beneficial these results point to the potential importance of peer monitoring mechanisms in mitigating moral hazard copyright 1991 by american economic association

monopoly with incomplete information recent theoretical research on principal agent relationships has emphasized incentive problems that arise when the parties involved are constrained by either asymmetric information or their inability to monitor each other s actions here we concentrate on the former constraint and consider the case of a single principal the monopolist the main contribution is to show that under a separability assumption strong conclusions can be drawn about the nature of optimal incentive schemes although the primary focus is on optimal quantity discounts in a monopolized market the results also shed light on related topics such as optimal income taxation and commodity bundling

optimal retailer s replenishment decisions in the epq model under two levels of trade credit policy abstract the main purpose of this paper is to investigate the optimal retailer s replenishment decisions under two levels of trade credit policy within the economic production quantity epq framework we assume that the supplier would offer the retailer a delay period and the retailer also adopts the trade credit policy to stimulate his her customer demand to develop the retailer s replenishment model under the replenishment rate is finite furthermore we assume that the retailer s trade credit period offered by supplier m is not shorter than the customer s trade credit period offered by retailer n m n since the retailer cannot earn any interest in this situation m n based upon the above arguments this paper incorporates both chung and huang k j chung y f huang the optimal cycle time for epq inventory model under permissible delay in payments international journal of production economics 84 2003 307 318 and huang y f huang optimal retailer s ordering policies in the eoq model under trade credit financing journal of the operational research society 54 2003 1011 1015 under above conditions in addition we model the retailer s inventory system as a cost minimization problem to determine the retailer s optimal replenishment decisions then three theorems are developed to efficiently determine the optimal replenishment decisions for the retailer we deduce some previously published results of other authors as special cases finally numerical examples are given to illustrate the theorems obtained in this paper then as well as we obtain a lot of managerial insights from numerical examples

optimal inventory policy with noninstantaneous receipt under trade credit abstract in the last two decades the models for inventory replenishment policies under trade credit have been widely studied by several researchers however the extant papers only consider the effects of permissible delay in payments in the inventory systems in some situations the supplier also may offer a cash discount to encourage retailer to pay for his purchases quickly on the other hand an inventory model with instantaneous receipt is not a common feature in actual practice for generality this study develops an inventory model with noninstantaneous receipt under trade credit in which the supplier provides not only a permissible delay but also a cash discount to the retailer we then characterize the optimal solution and provide an easy to use criterion to find the optimal order strategies finally several numerical examples are presented to illustrate the theoretical results

a theory of interactions between mfis and informal lenders abstract we provide a theoretical analysis of effects of entry of a microfinance institution mfi into an informal credit market which is segmented whereby informal lenders derive some market power owing to privileged information concerning borrower specific default risks relative to informal lenders the mfi has a cost advantage and an informational disadvantage regarding borrower risk borrowers differ along another dimension landholding which is observable to all lenders mfi entry is shown to induce selection effects across risk and landownership dimensions in shifts of borrowers from informal lenders to the mfi which could raise informal interest rates as observed in many ldcs the model is consistent with evidence from bangladesh and west bengal in contrast to hypotheses based on cream skimming scale diseconomy inducing collusion facilitating or crowding in effects of mfis on informal credit the model implies that mfi entry is pareto improving for borrowers irrespective of effects on informal interest rates

access to capital in rural thailand an estimated model of formal versus informal credit the aim of this paper is to understand the mechanism underlying access to credit the author focuses on two important aspects of rural credit markets in thailand first moneylenders and other informal lenders coexist with formal lending institutions such as government or commercial banks and more recently micro lending institutions second potential borrowers presumably face sizable transaction costs obtaining external credit the author develops and estimates a model based on limited enforcement and transaction costs that provides a unified view of those facts the results show that the limited ability of banks to enforce contracts more than transaction costs is crucial in understanding the observed diversity of lenders

the impact of formal finance on the rural economy of india india has systematically pursued a supply led approach to increasing agricultural credit its objectives have been to replace moneylenders to relieve farmers of indebtedness and to achieve higher levels of agricultural credit investment and output india s success in replacing moneylenders has been outstanding between 1951 and 1971 their share of rural credit appears to have dropped from more than 80 percent to 36 percent it may have dropped to as low as 16 percent by 1981 but that estimate is disputed still institutional credit is far from reaching all farmers only about a quarter of cultivators borrow and no more than 2 percent take out long term loans most small farmers have little access to credit and long term credit goes mostly to large farmers overall farm debt has probably not increased sharply in real terms as formal credit has primarily substituted for credit from other sources moreover with the rapid growth of commercial banks in the 1970s the system mobilized more deposits than it lent in rural areas in 1981 of course enhanced deposit services are a useful service of the rural population but one must ask what has been the impact of heavy rural credit and better financial services on agricultural investment production and rural incomes the authors econometric results suggest that the rapid expansion of commercial banks in rural areas has had a substantially positive effect on rural nonfarm employment and output the availability of better banking facilities appears to have overcome one of the obstacles to locating nonfarm activities in rural areas expanded rural finance has had less of an effect on output and employment in agriculture than in the nonfarm sector the effect on crop output has not been great despite the fact that credit to agricluture has greatly increased the use of fertilizer and private investment in machines and livestock there has been more impact on inputs than on output so the additional capital investment has been more important in substituting for agriclutural labor than in increasing crop output but overall rural credit and expansion of the rural financial system have had a positive effect on rural wages creating nonfarm jobs has apparently added more to total employment than the substitution of capital for labor has subtracted it in agriculture so wages have risen even for agricultural workers albeit modestly the supply led approach to agricultural credit that has been pursued for three decades has clearly benefited current borrowers and farm households formerly indebted to moneylenders it has also spurred fertilizer use and investment in agriculture it has been less successful in generating viable institutions and has failed to generate agricultural employment the policy s costs to india s government have been high as portfolio losses associated with poor repayment ultimately have to be borne by the government or one of its institutions under optimistic assumptions the benefits of the agricultural income are at best no more than 13 percent higher than the cost to the government of the extra agricultural credit if assumptions about the cost of supplying the credit and about repayment rates are less optimistic the social costs and the costs to the government of providing the credit would have exceeded the benefits in agricultural income the expansion of commercial banks to rural areas paid off in nonfarm growth employment and rural wages the question is could these benefits have been achieved without imposing agricultural credit targets on the commercial banks and credit cooperatives or did the commercial banks expand only because they were forced to lend to agriculture the authors could not answer these questions with the data at hand

an inventory model with deteriorating items under inflation when a delay in payment is permissible abstract this study develops an inventory model for initial stock dependent consumption rate when a delay in payment is permissible in the inventory model shortages are not allowed the effect of the inflation rate deterioration rate initial stock dependent consumption rate and delay in payment are discussed in the study mathematical models are also derived under two different circumstances i e case i the credit period is less than or equal to the cycle time for settling the account and case ii the credit period is greater than the cycle time for settling the account besides expressions for an inventory system s total cost are derived for these two cases moreover a computational procedure and gino lasdon et al acm transactions mathematical software 4 1978 34 50 are proposed to obtain the optimal order size and cycle time the results can help managers determine the optimal total cost finally a numerical example demonstrates the applicability of the proposed model

giving women credit the strengths and limitations of credit as a tool for alleviating poverty abstract poor women in developing countries often turn to self employment as a way to support themselves and their families but these small scale activities rarely yield enough income to lift them out of poverty recently ngos and donor agencies have sought to assist these women by providing credit which is otherwise largely unavailable to them the broad aims of these programs vary as do the strategies which range from simply offering credit a minimalist approach to providing training and technical assistance as part of the credit package a credit plus approach the channels used bank schemes intermediary programs parallel programs or poverty focused development banks also vary so far the last three channels have been more effective than the first in improving women s access to credit however not enough is known about which strategies have the greatest economic impact for particular groups of women and further evaluation is needed

the optimal inventory policies under permissible delay in payments depending on the ordering quantity abstract this paper deals with the problem of determining the economic order quantity under conditions of permissible delay in payments the delay in payments depends on the quantity ordered when the order quantity is less than the quantity at which the delay in payments is permitted the payment for the item must be made immediately otherwise the fixed trade credit period is permitted the minimization of the total variable cost per unit of time is taken as the objective function an algorithm to determine the economic order quantity is developed the results obtained in this paper generalize some already published results

an eoq model under retailer partial trade credit policy in supply chain abstract the main purpose of this paper is to investigate the retailer s inventory policy under two levels of trade credit to reflect the supply chain management situation in this paper we assume that the retailer has the powerful decision making right so we extend the assumption that the retailer can obtain the full trade credit offered by the supplier and the retailer just offers the partial trade credit to his her customer then we investigate the retailer s inventory system as a cost minimization problem to determine the retailer s optimal inventory policy under the supply chain management two easy to use theorems are developed to efficiently determine the optimal inventory policy for the retailer we deduce some previously published results of other researchers as special cases finally numerical examples are given to illustrate the theorems and obtain a lot of managerial phenomena

inventory ordering policies of delayed deteriorating items under permissible delay in payments abstract the existing literature on inventory of deteriorating items considers deterioration to begin as soon as the items are stocked however there are several deteriorating items that do not start deteriorating immediately they are held in stock some farm produce like potatoes yams and even some fruits and vegetables have this property depletion of these items as soon as they are stocked will depend on demand and when deterioration begins it will depend on both demand and deterioration in this paper we develop a mathematical model on the inventory of deteriorating items that do not start deteriorating immediately they are stocked the model also takes into cognizance the fact that in business activities nowadays customers are given some allowed period within which to settle for the goods supplied to them they can use the accrued money from sales of the supplied goods to earn interest within the allowed period they are charged interest only when they fail to settle the amount they owe the supplier at the end of the allowed period

a little at a time the use of regularly scheduled repayments in microfinance programs abstract informal lenders appear to be thriving even in regions where microfinance institutions mfis such as the grameen bank have established lending programs we suggest that an explanation for this well documented observation lies in the ubiquitous use of regularly scheduled repayments by mfis borrowers are typically required to repay their loans in tightly structured installments beginning soon after loan disbursement this little remarked aspect of the repayment schedule is usually explained as inculcating fiscal discipline among borrowers we argue that an alternative rationale for this loan repayment structure lies in the difficulty of monitoring borrowers actions the potential for moral hazard leads mfis to use innovative mechanisms such as regularly scheduled repayments which indirectly coopt the better informed informal lenders conversely this installment repayment structure allows informal lenders to survive further we show that this linkage can not only expand the volume of informal lending but may also raise the interest rate in the informal sector

optimal ordering policies under conditions of extended payment privileges this paper develops optimal order quantities for firms that are offered a one time opportunity to delay payment for an order of a commodity such delayed payments result in a reduction of the effective purchase cost which is a function of the return available on alternative investments the number of units of the commodity ordered and the length of the extended period optimal order quantities are developed for extended payment privileges that occur at a reorder point of between reorder points six suppliers extended payment scenarios are evaluated a simulation analysis is conducted to determine the sensitivity of derived models to changes in the various input parameters the simulation with realistic parameter values reveals that the additional discounted order quantity is insensitive to large changes in the ordering cost and unit price sensitive to changes in the carrying cost and return rate of funds but without significantly affecting the total cost and extremely sensitive to the annual demand

a century of evolution from harris s basic lot size model survey and research agenda abstract determining the economic lot size has always represented one of the most important issues in production planning this problem has long attracted the attention of researchers and several models have been developed to meet requirements at minimum cost in this paper we explore and discuss the evolution of these models during one hundred years of history starting from the basic model developed by harris in 1913 up to today following harris s work a number of researchers have devised extensions that incorporate additional considerations the evolution of eoq theory strongly reflects the development of industrial systems over the past century here we outline all the research areas faced in the past by conducting a holistic analysis of 219 selected journal papers and trying to give a comprehensive view of past work on the eoq problem finally a new research agenda is proposed and discussed

optimal ordering policies when the supplier provides a progressive interest scheme abstract in fact most credit card issuers or home equity banks frequently offer cardholders or customers a teaser interest rate say i 1 which is significantly lower than the regular interest rate of i 2 with i 2 i 1 for only 6 months or a year say m 2 to lure new customers from their competitors consequently the customer faces a progressive interest charge from the bank if the customer pays the outstanding balance by the grace period say m 1 which is generally 25 days then the bank does not charge any interest if the outstanding amount is paid after m 1 but by m 2 with m 2 m 1 then the bank charges the customer the teaser interest rate of i 1 on the unpaid balance if the customer pays the outstanding amount after m 2 then the bank charges the regular interest rate of i 2 in this paper we first establish an appropriate eoq model for a retailer when the bank or the supplier offers a progressive interest charge and then provide an easy to use closed form solution to the problem

credit layering in informal financial markets abstract informal lenders with access to markets or capital often find it attractive to delegate loan provision to downstream lenders who have an information or enforcement advantage in dealing with particular borrowers in this paper we examine the conditions under which such an arrangement is preferred by two informal lenders a landlord and a merchant who compete in loan provision to tenant farmers differentiated by wealth we show that credit layering is preferred only when tenants are sufficiently poor in this case the trader lends to tenant farmers via a contract with their landlord otherwise only the trader lends as a consequence a pattern of borrowing emerges in which relatively wealthy tenants borrow from merchants while poor tenants borrow mainly from their landlords interlinkage between land and credit thus arises only for a subset of tenants and purely as a consequence of credit layering this pattern is shown to be supported empirically

microfinance and investment a comparison with bank and informal lending summary comparing the impact of different types of credit on households investment in bangladesh we find that loans from microfinance institutions are likely to be channeled toward non agricultural activities while both informal and bank lending are associated to a higher expenditure in agricultural inputs estimated effects are net of the differences in the amount borrowed interest rates and collateral results suggest that features which are specific to microfinance such as tight repayment schedules and land based eligibility rules may reduce the suitability of this source of funds for the farming sector

imperfect information screening and the costs of informal lending a study of a rural credit market in pakistan many governments have perceived the rural moneylender as usurious this article takes a first step toward directly testing the validity of this view in a study of services costs and charges of fourteen informal market moneylenders and their clients in chambar pakistan the article examines whether the high implicit interest rates charged reflect the actual costs of operating in that market estimates of the resource costs incurred by informal lenders for screening pursuing delinquent loans overhead and cost of capital including unrecoverable loans suggest that lenders charges are equal to their average cost of lending but exceed their marginal cost this finding is consistent with the view that the informal credit market is characterized by excess capacity and monopolistic competition in the presence of imperfect information

finance and growth for microenterprises evidence from rural china using a survey dataset of chinese rural households we find that access to external finance is positively associated with the decision to become entrepreneur and the initial investment for microenterprises also we find that use of informal finance especially financing from friends and family is positively associated with sales growth of microenterprises with employees but not of self employed we do not find any significant relationship between the use of formal finance and firm growth our findings underline the importance of finance for entrepreneurship and microenterprise growth and the role of informal finance in the absence of efficient formal financial institutions

on financial innovations and credit market evolution abstract this paper examines the role of financial innovations in the economic development process it discusses the place of policy intervention in the financial development of developing countries and through a case study of an innovative bank illustrates the nature and characteristics of the financial innovations necessary for financing small enterprises and mobilizing resources from low and middle income groups such financial innovations are shown to reduce transaction costs and risk and as a result to bring about widening deeping and intergration of capital markets this process accelerates economic development through a favorable impact on savings investment and output

financial deregulation and segmented capital markets the case of korea abstract this paper deals with the relation between the official and the unregulated or curb segments of the capital market in korea the paper focuses on the behavior of officially controlled interest rates paid on time deposits and on freely determined curb market interest rates the effects of financial deregulation on interest rates investment and growth are investigated it is argued that under some plausible circumstances financial deregulation can generate significant crowding out in the curb market reducing the total degree of financial intermediation the empirical results provide some support to the crowding out hypothesis and indicate that changes in the officially controlled time deposit rate have been positively related to changes in the freely determined curb market interest rate an aggregate investment function is also estimated for korea it is found that an increase decrease in the curb rate discourages encourages investment on the other hand increases in the real volume of credit intermediate in the official segment have a positive effect on real aggregate investment

collateral guaranties and rural credit in developing countries evidence from asia abstract the paper reviews the theory of the impact of loan collateral and in particular land collateral in institutional and non institutional rural credit markets evidence from three asian developing countries is presented showing extensive use of land collateral among institutional lenders in countries where such collateral is legal the use of land collateral is more common than other forms of security except in places where legal inhibitions on mortgaging agricultural land exist non institutional lenders are less inclined to use land collateral however lenders who do not have links to borrowers in matters other than finance are more likely to use loan securities estimates of instutional credit supply and demand in rural thailand confirm that the pledging of land collateral affects the supply of credit more than group guaranty it is also shown that larger farmers are more likely to utilize land collateral the conclusion is that land collateral is preferred by institutional lenders as it reduces creditworthiness assessment costs attempts to ban or limit collateral use by decree are motivated by equity cinsiderations but they will cause loss of efficiency simplification of ownership verification and other policies reducing the transaction cost of collateral pledging will mitigate the negative equity implications of collateral

the optimal retailer s ordering policies for deteriorating items with limited storage capacity under trade credit financing abstract under permissible delay in payments all previously published models implicitly assumed that the supplier would offer the retailer a delay period but the retailer would not offer the trade credit period to his her customer huang 2003 journal of the operational research society 54 1011 1015 developed a retailer s replenishment model to reflect the real life situations by assuming that the retailer also adopts the trade credit policy to stimulate his her customer demand in huang s model it is assumed that the goods are not perishable and the storage capacity is unlimited based upon the above argument we propose a two warehouse inventory model for deteriorating items under permissible delay in payments three theorems are developed to determine the optimal cycle time and numerical examples are given to illustrate these theorems finally the results in this paper generalize the results presented by huang 2003 journal of the operational research society 54 1011 1015

planning for shortages net present value analysis for a deteriorating item with partial backlogging abstract this paper develops inventory models to help answer strategic questions concerning whether planning for shortages offers financial benefits a production inventory system producing a deteriorating product in batches at a finite production rate with partial backordering is considered customers pay a deposit when placing a backorder backordered items receive a discount on the sales price as lost sales may lead to customers not returning the demand rate may depend on the fraction of lost sales we develop a cash flow based profit maximising net present value npv model without the inventory cost parameters commonly used in this context unit holding cost unit backorder cost unit deterioration cost and unit lost sales cost the model finds the optimal inventory policy just like npv models that discount the traditional parameters but has the advantage of not needing to estimate the value of the traditional parameters it is shown that in models based on discounting the traditional parameters the parameters are not exogenously determinable but are non trivial functions of non financial endogenous system parameters such as the production rate annual demand rate and backorder rate extensive numerical experiments illustrate how cash flow npv models provide insights into the value of planning for shortages and strategic choices about the design of the production inventory system it also provides insight into the classical problem of how to interpret unit backorder cost and unit lost sales cost the study indicates that these insights cannot be reliably obtained from npv models based on discounting unit backorder costs and unit lost sales costs

inventory models with the demand rate dependent on stock and shortage levels this paper investigates an inventory system in which the demand rate during stockout periods differs from that during the in stock period by a given amount the previous analysis conducted in this area formulated the model as a cost minimization model this type of formulation will intentionally try to decrease demand by increasing the stockout period in order to decrease costs this paper appropriately considers the model as a profit maximization model and develops a closed form solution the model is then further generalized to incorporate the effect of stock level dependent demand rates and considers initial stock dependent demand as well as instantaneous stock dependent demand rates

optimal pricing and ordering policy under permissible delay in payments abstract many researchers have assumed that the selling price is the same as the purchase cost and developed various eoq models for a retailer when the supplier offers a permissible delay in payments in this paper we complement the shortcoming of their models by considering the difference between the selling price and the purchase cost we then develop an algorithm for a retailer to determine its optimal price and lot size simultaneously when the supplier offers a permissible delay in payments our theoretical result contradicts to their conclusion that the economic replenishment interval and order quantity generally increases marginally under the permissible delay in payments

signaling in credit markets in this paper we show that under a variety of alternative assumptions about the private information of loan applicants a competitive market for loans is characterized by screening banks separate out loan risks by offering higher loans at higher interest rates depending on the nature of the informational asymmetry it may be that applicants with less risky projects select larger rather than smaller loans comparative statics implications are also examined in particular we explore the effects of an increase in banks cost of funds on average loan quality

moneylenders and bankers price increasing subsidies in a monopolistically competitive market abstract in many areas of the world a significant part of the cost of obtaining a good or service is the cost of enforcing the contracts entailed in its provision we present models of markets with endogenous enforcement costs motivated by studies of rural credit markets we show that subsidies may have perverse effects under monopolistic competition increasing prices or inducing exit higher prices interest rates result from the loss of scale economies or from negative externalities among suppliers the models are consistent with the puzzling evidence that infusions of government subsidized formal credit have not improved the terms offered by moneylenders

dis advantages of informal loans theory and evidence abstract we study borrowers choice between formal and informal credit in a setting with imperfect debt enforcement in contrast to formal loans e g from banks informal loans e g from friends or relatives can be enforced by the threat of severing social ties if the underlying social capital is sufficiently large we show that informal loans carry lower interest rate and collateral than formal loans including the possibility of zero interest and collateral this makes informal credit a priori more attractive to borrowers at the same time since physical collateral is divisible unlike the social capital pledged in informal credit default on formal loans is less costly to both parties than default on informal loans because of this trade off formal and informal credit can co exist depending on the loan riskiness measured by the ratio of loan size to borrower s wealth ltw ratio borrowers choose formal credit for riskier larger loans while informal credit is preferred for smaller projects with low default risk empirical results using household data from rural thailand are consistent with the predicted choice pattern and terms of formal and informal credit

formal informal sector interaction in rural credit markets abstract the majority of small cultivators in the less developed countries are not regarded as credit worthy by the formal sector financial institutions and are forced to borrow from the moneylenders in the informal credit market this paper shows that when such borrowers differ in their likelihood of default and the moneylenders are asymmetrically informed about the client specific degree of risk the policy of providing cheap credit through the formal sector can generate adverse composition effects which worsen the terms of credit and the availability of loans in the informal sector

slack shortage and discouraged consumers in eastern europe estimates based on smoothing by aggregation as a consequence of aggregation over markets the observed quantity may be less than the quantity demanded and less than the quantity supplied to deal with such situations a new technique is proposed for estimating demand and supply curves and the extent of shortage and slack the technique is applied to the consumption goods markets of czechoslovakia the german democratic republic hungary poland and yugoslavia it is found that shortage even corrected for a discouraged consumer effect is seldom as great as slack

an epq model of ramp type demand with weibull deterioration under inflation and finite horizon in crisp and fuzzy environment abstract this paper deals with an economic production model for deteriorating items with ramp type demand rate a single item is produced and the finite rate of production is proportional to the demand rate the deterioration rate of the item is taken as two parameter weibull s distribution we also have considered the effect of inflation when there is no shortage in the stock and the model is under finite time horizon the inventory model is solved under crisp and fuzzy environment to evaluate the optimum solution of the model in different cases we illustrate the model with an example by taking various number of replenishment we present sensitivity analysis to illustrate the example under crisp and fuzziness thus the objective of the paper is to find the optimal solution of production time so as to minimize the present value of total cost of the whole replenishment cycle and to check which environment crisp or fuzzy is desirable

an eoq model with deteriorating items under inflation when supplier credits linked to order quantity abstract this study proposes an inventory model under a situation in which the supplier provides the purchaser a permissible delay of payments if the purchaser orders a large quantity shortages are not allowed and the effect of the inflation rate deterioration rate and delay in payment are discussed as well as a result in this paper we establish an eoq model for deteriorating items under inflation when the supplier offers a permissible delay to the purchaser if the order quantity is greater than or equal to a predetermined quantity we then characterize the optimal solution and provide an easy to use algorithm to find the optimal order quantity and replenishment time finally some numerical examples are given to illustrate the theoretical results and made the sensitivity analysis of parameters on the optimal solutions

inventory games with permissible delay in payments abstract meca et al 2004 studied a class of inventory games which arise when a group of retailers who observe demand for a common item decide to cooperate and make joint orders with the eoq policy in this paper we extend their model to the situation where retailer s delay in payments is permitted by the supplier we introduce the corresponding inventory game with permissible delay in payments and prove that its core is nonempty then a core allocation rule is proposed which can be reached through population monotonic allocation scheme under this allocation rule the grand coalition is shown to be stable from a farsighted point of view

a deterministic eoq model with delays in payments and price discount offers abstract it is the purpose of this paper to model the retailer s profit maximizing strategy when confronted with supplier s trade offer of credit and price discount on the purchase of merchandise generally retailers have to face many types of demands for different kinds of goods in real situation retailers have to correlate between the selling price and supplier s trade offer keeping in mind profit maximization strategy in the proposed model all increasing deterministic demands are discussed analytically numerically and graphically in the environment of permissible delay in payment and discount offer to the retailer

multi agent simulations to explore rules for rural credit in a highland farming community of northern thailand thanks to recent advances in the field of distributed artificial intelligence agentbased models abm can now be used to run simulations of social phenomena based on their computerized representations and to apply experimental methods in social sciences axelrod 1997 gilbert and troitzsch 1999 jager 2000 in the field of renewable resource management and environmental sciences several abm simulation platforms offer the possibility to explore interactions between social and ecological dynamics costanza and ruth 1998 bousquet et al 1998 lansing 2002 in these complex systems the social and economic dynamics can be viewed as a set of interactions among heterogeneous agents generating aggregate phenomena that are different from the behaviour of groups of average individuals considered in classical economic thinking rouchier and bousquet 1998 such a view was adopted in the research presented here

corporate financial policy and the theory of financial intermediation this paper examines the optimal structure of financial contracts in an economy subject to two forms of moral hazard multiple information problems are shown to generate a role for multiple classes of financial claimants we then show that economic efficiency is enhanced if the financial structure of the economy consists of both direct and intermediated financial contract markets consequlently our results demonstrate a motivation for the complementarity between capital markets and depository financial institutions the purpose of this paper is to provide an analysis of the complementary roles of direct financial contract markets and intermediated financial contract markets in the modern theory of corporate finance the need to formulate such a model has been emphasized elsewhere by stiglitz 1985 and fama 1985 among others however an adequate explanation of this phenomenon has yet to be formulated the model described in this paper focuses on the role of multiple information problems in a theory of complex financial structure specifically in an environment with private action i e unobservable investment allocations and private information i e partially unobservable project cash flows multiple claimant classes arise to resolve the separate inefficiencies induced by moral hazard in our model the interaction of project risk and observability creates investment distortions which can be mitigated by increasing the number of outside claimant classes our results demonstrate explicitly the way in which a firm s optimal financial structure depends on the assumed configuration of an investment project s risk and observability characteristics under certain conditions we show that the optimal contractuai allocation in an economy with only direct financial contract markets consists of a debt contract and an outside equity claim this contractual configuration restores the efficient investment allocation decision we then consider the feasibility of an intermediated financial contract market in this setting we show that the existence of an intermediated financial contract market improves economic efficiency due to the reduced aggregate costs of

the financial power of the powerless socio economic status and interest rates under partial rule of law in advanced economies interest rates vary inversely with the borrower s socio economic status which itself depends inversely on default risk these relationships depend on the impartiality of the law where the law is markedly biased in favour of certain groups the latter will pay a surcharge for capital legal power as measured by privileges before the law thus undermines financial power the capacity to borrow cheaply developing this argument this paper also tests it through judicial records from ottoman istanbul 1602 1799 three privileged ottoman groups men muslims and titled elites all paid relatively high interest rates conditional on various loan characteristics this article is protected by copyright all rights reserved

an idea in good currency and how it grew the informal sector abstract the informal sector is an exceedingly fuzzy concept which has come into wide use because it seemed to address the interests of a number of very diverse groups those interested in growth planning those interested in alleviating poverty marxist structuralists and those interested in economic accounting the use of the concept has been helpful in directing attention to phenomena previously ignored but adopting the term obscures analysis of central issues and is counterproductive we should rather specify critical policy issues and design field research around these

interactions between institutional and informal credit agencies in rural india in an attempt to expand rural credit and displace the village moneylender india created a system of rural cooperatives in the 1950s and expanded branch banking into rural areas in the 1970s this article examines how these measures affected the rural market it begins with the question of how large the expansion of institutional credit has been and the extent to which it has dislodged the village and nonresident moneylenders a detailed comparison of three major surveys of the indian rural credit market suggests that in various guises the moneylender is still a major source of loans the article also examines the weak evidence on intermediation between the formal and informal sectors a formal model of the interaction between the informal moneylender and institutional lender is constructed under a variety of assumptions about the exclusivity of loan contracts and the competitive structure of the informal sector the conclusions are drawn together in the form of five proposals for public policy