group lending repayment incentives and social collateral abstract in this paper we investigate the impact on repayment rates of lending to groups which are made jointly liable for repayment this type of scheme especially in the guise of the grameen bank in bangladesh has received increasing attention we set up and analyze the repayment game which group lending gives rise to our analysis suggests that such schemes have both positive and negative effects on repayment rates the positive effect is that successful group members may have an incentive to repay the loans of group members whose projects have yielded insufficient return to make repayment worthwhile the negative effect arises when the whole group defaults even when some members would have repaid under individual lending we also show how group lending may harness social collateral which serves to mitigate its negative effect

share contracts and their rationale lessons from marine fishing most of the existing literature on share contracts is based explicitly or implicitly on agriculture a sector in which share contracts are seldom dominant and apparently on the decline moreover since agricultural activities have some rather special characteristics the purpose of the present article is to analyse contractual choice and especially the choice of share contracts in a sector in which share contracts are dominant namely fishing in the process of explaining the dominance of share contracts in fishing the article also explains a some heretofore neglected features of these share contracts such as the way in which shares are calculated and the treatment of repair and maintenance expenditures b the nature and extent of interlinked transactions c the exceptional cases where share contracts are not used and d the relevance of varying environmental conditions and especially those of poor developing countries to the nature of contracts in fishing and to the differences therein between

dynamic spillover effects among crude oil precious metal and agricultural commodity futures markets abstract this paper examines spillover effects among six commodity futures markets gold silver west texas intermediate crude oil corn wheat and rice by employing the multivariate deco garch model and the spillover index specifically we investigate the dynamics of return and volatility spillover indices to reveal the intensity and direction of transmission during the recent global financial and european sovereign debt crises our empirical results are as follows first we estimate a positive equicorrelation between commodity futures market returns and find that it increased sharply during the crises this effect can persist during periods of economic and financial turmoil diminishing the benefits of international portfolio diversification for investors second we identify bidirectional return and volatility spillovers across commodity futures markets and find more pronounced trends in their levels in the post crisis period this indicates the strong impact of spillovers during crisis periods third both gold and silver are information transmitters to other commodity futures markets while the remaining four commodity futures investigated were receivers of spillovers during recent periods of financial stress finally we analyse the optimal portfolio weights and time varying hedge ratios between metal and other commodities futures markets overall our findings provide new insights into channels of information transmission which may improve investment decisions and inform portfolio investors trading strategies

do global risk perceptions influence world oil prices abstract this paper investigates the information transmission mechanism between world oil gold silver dollar euro exchange rate markets and volatility index vix accommodating for global risk perceptions we find that there is a unique long run equilibrium relationship where gold silver exchange rate and risk perceptions appear as long run forcing variables of world oil prices we uncover that global risk perceptions have a significantly suppressing effect on oil prices in the long run we also discover that global risk perceptions play a less important role in explaining the forecast error variance of oil prices in the short run than prices in the alternative investment markets our results also suggest that a shock in risk perceptions of global investors have a negative but short lived initial impact on oil prices

the impact of global oil price shocks on china s bulk commodity markets and fundamental industries this paper investigated the reaction of aggregate commodity market to oil price shocks and also explored the effects of oil price shocks on china s fundamental industries metals petrochemicals grains and oilfats we separated the volatilities of oil price into expected unexpected and negatively expected categories to identify how oil prices influence bulk commodity markets we contrasted the results between different periods and among classified indices in order to discover the significant changes in recent years and the differences at an industry level our results indicate that the aggregate commodity market was affected by both expected and unexpected oil price volatilities in china the impact of unexpected oil price volatilities became more complex after 2007 the metals and grains indices did not significantly respond to the expected volatility in oil prices in contrast to the petrochemicals and oilfats indices these results not only contribute to advancing the existing literature but also merit particular attention from policy makers and market investors in china

supply and demand driven oil price changes and their non linear impact on precious metal returns a markov regime switching approach abstract this paper examines the nonlinear effect of oil price shocks on precious metal returns using markov regime switching regression we use ready s 2018 approach to decompose oil price changes into supply demand and risk driven shocks results indicate a significant positive impact of demand and supply shocks and a negative impact of risk shocks on precious metal returns although we find evidence of switching between low and high volatility regimes we do not find strong regime effect on supply or demand shocks contemporaneous relationship with precious metal returns however risk shocks influence on precious metal returns is strongly regime dependent these results generally hold for different distributional specification of error terms

the impact of group lending in northeast thailand abstract much of the literature on group lending focuses on its high repayment rates rather than its goal of promoting borrower welfare most studies that attempt to measure the impact of group lending neglect the issues of self selection and endogenous program placement thus leading to biased estimates of impact one reason for this neglect is the lack of data that would allow for identification of impact this paper surmounts these problems by using data from a quasi experiment conducted in northeast thailand in 1995 1996 program participants were identified in six control villages 1 year prior to receiving loans surveys were then conducted of these control members treatment members in eight older program villages and nonmembers in both types of village this survey design allows for straightforward estimation of impact the results indicate that program loans are having little impact although naive estimates of impact that fail to account for self selection and endogenous program placement significantly overestimate impact

rotating savings and credit associations the choice between random and bidding allocation of funds abstract the performance and efficiency of random and bidding rotating savings and credit associations roscas are compared within a game theoretic model information about individuals return from investing the rosca pool is assumed to be asymmetric and imperfect and rosca members are allowed to use funds raised outside the rosca to supplement the funds raised in the rosca the conclusion is that although both types of roscas can improve individual welfare the bidding rosca is preferred to the random rosca except when credit from other sources is costly and types of rosca members are not widely dispersed

formal credit corruption and the informal credit market in agriculture a theoretical analysis the paper presents a theory of interest rate determination on informal credit in backward agriculture when there is a market for formal credit the farmer has to bribe the official of the formal credit agency in order to get formal credit the official and the moneylender play a non cooperative game in choosing the amount of formal credit and the informal interest rate respectively the informal sector interest rate and the effective formal sector interest rate incorporating the bribe are equal in equilibrium a reduction in the formal interest rate and or an increase in the price of the product may lead to an increase in the equilibrium bribing rate and the informal interest rate when the formal credit and the informal credit are complementary to each other

rural financial markets in low income countries recent controversies and lessons abstract recently some researchers have criticized traditional agricultural credit policies in low income countries this article identifies the major points of controversy between traditional views and these new views and also summarizes the primary lessons learned from these controversies savings mobilization more flexible interest rate policies less loan targeting and greater emphasis on improving the quality of financial services in rural areas are new views that are emphasized

retracted on the conditional dependence structure between oil gold and usd exchange rates nested copula based gjr garch model energy commodities and precious metals differ from other trading products both oil and gold prices are leading economic variables and drive the evolution of the world economy since the us dollar is used as the primary currency of international crude oil and gold trading the relationship between commodities metals and exchange rates has become a major research agenda recently therefore this study proposes a nested copula based gjr garch model to explore the dependence structure between oil gold and the usd exchange rate more importantly a comparative framework based on two sub periods is implemented to capture the co movement during normal and crisis periods empirical results suggest that for both crisis periods the dependence between oil gold and the usd exchange rate is stronger compared with the dependence during the untroubled period moreover the co movement is accelerated which is explained by the unusual movement of the usd during the global financial crisis of 2007 2009

oil prices and the rise and fall of the us real exchange rate abstract questions of the relative importance of real vs monetary shocks in explaining exchange rate movements still have no widely accepted answer despite their importance both for the research agenda and for policy questions we examine this issue using a variety of empirical techniques for the us effective exchange rate we find that a stable link exists between oil price shocks and the us real effective exchange rate over the post bretton woods period the results suggest that oil prices may have been the dominant source of persistent real exchange rate shocks and that energy prices may have important implications for future work on exchange rate behavior

state credit programs and the peasantry under populist regimes lessons from the apra experience in the peruvian amazon abstract a study near iquitos peru finds that a national agricultural program implemented in the late 1980s which provided peasants with access to credit secure land tenure and grassroots organization promised to reduce rather than improve the welfare of intended beneficiaries new economic conditions and strategic behaviors engendered by the program threatened to combine through a process of community enclosure and competitive exclusion to undermine the subsistence viability of peasant communities general lessons are drawn for more effective rural development programs ones that pay particular attention to direct and indirect feedback effects of macroeconomic policy the factors that limit peasant economic competitiveness and to the fundamental spatiality of development processes

metal volatility in presence of oil and interest rate shocks abstract this study uses three two factor volatility models of the garch family to examine the volatility behavior of three strategic commodities gold silver and copper in the presence of crude oil and interest rate shocks the results of the standard garch models suggest that gold and silver have almost the same volatility persistence which is greater than that of copper the cgarch estimates indicate that the short run transitory component of volatility converges to zero much faster for copper than for gold and silver in this sequence however the permanent volatility component demonstrates equally strong persistence in the long run for all three metals the egarch results suggest that the leverage effect is present and significant for copper only implying that gold and silver can be good investment in anticipation of bad times past oil shock does not impact all three metals similarly monetary policy and to leaser extent the oil shocks have calming effects on precious metals but not on copper if the t bill rate is used crises such as the 2003 iraq war heighten metal volatility these results have implications for derivatives valuations using gold as a reserve asset risk analysis and for the commodity exporting countries and commodity producing firms

gold oil dependence dynamics and the role of geopolitical risks evidence from a markov switching time varying copula model abstract this paper examines the dependence structure and dynamics between gold and oil prices specifically we study the hedge and safe haven ability of gold for oil prices using daily gold prices and west texas intermediate institute wti crude oil spot prices to this end we employ time varying markov switching copula models the period of the analysis spans from 2 january 1985 to 30 november 2017 the heterogeneity of market agents is captured by decomposing the raw original series into different multi resolution analysis mra investment horizons d1 s9 furthermore we examine the effect of geopolitical risks on the dynamic dependence between gold and oil we provide evidence of time varying markov tail dependence structure and dynamics between gold and oil while our results show that gold is a good hedge for oil returns and for short and medium term investors it cannot protect long term investors against losses arising from increasing oil prices we also provide evidence in support of the safe haven ability of gold for oil moreover we show that the inclusion of geopolitical risks in a pure gold and oil asset portfolio provides diversification benefits since the former has mostly a negative effect on the dependence structure between gold and oil

evaluating the impact of mexico s land reform on agricultural productivity abstract in mexico land reform law and the terms of credit access suggest a priori that farmers in the land reform ejido sector should be less productive than private farmers analysis of studies comparing the productivity of individual ejido parcels and small private holdings however reveals no significant difference between the two sectors between tenure categories there is a de jure but not a de facto difference in small farmers control over resources partly because farmers circumvent restrictions implicit in the land reform the case for formal privatization of the ejido sector may be less compelling than has been suggested

credit constraints credit unions and small scale producers in guatemala abstract efficient and equitable development outcomes may depend in part on whether formal financial institutions leave low wealth producers tightly constrained in their access to credit if so can cooperative institutions efficiently relax these constraints these issues are explored using survey data gathered from 950 small scale producer households in areas of guatemala with market oriented credit unions that mobilize savings and make unsubsidized loans nonprice rationing by banks is found to be common among lower wealth households while credit unions relax credit constraints for a significant portion of those rationed by banks but not the poorest of the study households

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

rebates as a mechanism to induce the entry of commercial banks into new markets abstract for several reasons governments may want to encourage commercial banks to offer credit to some specific groups this paper analyzes a contract scheme that may help achieve this objective without inducing financial disintermediation or other adverse behavior two sources of information asymmetry are considered between the government and the bank credit might be diverted to borrowers not belonging to the targeted group and between the bank and the borrower the latter may divert credit to purposes other than stated compared to other policies the scheme analyzed here is superior since it brings about lower interest rates and higher cooperation from banks to achieve the government s objective

local labor force education new business characteristics and firm performance it is often asserted that a highly educated workforce is vital to improving the competitive position of american businesses especially by boosting entrepreneurship to examine this contention we use population census data and a new panel data of startup firms to examine how the education and skill level of the local labor force are related to the creation and success of new businesses this paper studies relationship between education entrepreneurship and businesses outcomes and considers simultaneously both the education of the entrepreneur and of the workforce where the entrepreneurs operate their businesses consistent with this simultaneous focus our initial results indicate that more educated entrepreneurs tend to be located in metropolitan areas with more educated workforces moreover highly educated areas have above average entrepreneurship rates finally the level of education of entrepreneurs is strongly related to positive business outcomes especially for college graduates compared to those with less than a four year degree

delayed formal credit bribing and the informal credit market in agriculture a theoretical analysis abstract the paper presents a theory of interest rate determination in the informal credit market in backward agriculture the market for informal credit is created by the delay in disbursement of formal credit the delay is controlled by the official of the formal credit agency and he is bribed by the farmer to reduce the delay the official and the moneylender play a non cooperative game in choosing the bribing rate and the informal interest rate respectively the informal sector interest rate and the effective formal sector interest rate incorporating the bribe are equal in equilibrium agricultural price and credit subsidy policies may raise the interest rate in the informal credit market

time frequency causality and connectedness between international prices of energy food industry agriculture and metals abstract this study analyzes the lead lag relationship between the price indices of energy fuels and each of food industrial inputs agriculture raw materials metals and beverages in the time frequency domain to this end we first use the wavelet coherency and phase differences next we use the diebold and yilmaz 2012 and barunik and krehlik 2017 spillover indices to analyse the connectedness among the set of the price indices under consideration the period of the study is 1990m1 to 2017m5 the wavelet coherency results reveal that there are important and significant relations between the fuel and food prices the fuel and industrial prices and the fuel and metal prices these results also show that there are phase relationships between those paired prices the volatility spillover results indicate that the agricultural sector is the most affected by shocks from the other markets the return series of the industrial input prices at all frequencies appears to be the main source of volatility transmission to the prices of the other commodities over the whole period this finding underlines the relevance of the industrial inputs to policy makers particularly when they design policies to provide incentives related to industrial production

dynamic link between oil prices and exchange rates a non linear approach abstract we explore the non linear relationship between crude oil prices and exchange rates of major currencies from quantitative and structural perspectives by utilizing bivariate normal mixture model the correlation coefficients between oil prices and exchange rates demonstrate that their dependences typically start from 2004 then dynamically change over time then we investigate whether business cycle and oil price shocks as two possible exogenous factors affect the dependence structure of oil fx linkage we find significant structural heterogeneity during economic expansion while little evidence of heterogeneity in recession this finding provides alternative interpretations for the enhanced dependence between oil prices and exchange rates and generates implications of financialization in commodity market in terms of oil price shocks kilian 2009 the normal mixture model captures significant heterogeneity implying that unstable oil fx dependence structure is frequently associated with oil aggregate demand shocks and oil specific demand shocks with an emphasis on the dynamic weights of two underlying states we interestingly find that structural heterogeneities coincide with a variety of geopolitical and economic events the application of normal mixture not only provide us knowledge of non linear relationship between oil prices and exchange rates but also guidance for investors in risk management and portfolio diversification complementary to the traditional portfolio theory based on normal distribution

world oil prices precious metal prices and macroeconomy in turkey we examine the long and short run transmissions of information between the world oil price turkish interest rate turkish lira us dollar exchange rate and domestic spot gold and silver price we find that the world oil price has no predictive power of the precious metal prices the interest rate or the exchange rate market in turkey the results also show that the turkish spot precious metals exchange rate and bond markets do not also provide information that would help improve the forecasts of world oil prices in the long run the findings suggest that domestic gold is also considered a safe haven in turkey during devaluation of the turkish lira as it is globally it is interesting to note that there does not seem to be any significant influence of developments in the world oil markets on turkish markets in the short run either however transitory positive initial impacts of innovations in oil prices on gold and silver markets are observed the short run price transmissions between the world oil market and the turkish precious metal markets have implications for policy makers in emerging markets and both local and global investors in the precious metals market and the oil market

the effects of oil prices on the price indices in taiwan international or domestic oil prices matter abstract this study employs the multivariate threshold model developed by tsay 1998 to examine the effects of international and domestic oil prices on the price indices in taiwan using monthly data from january 1999 to december 2011 the results show that changes in domestic oil prices do not granger cause changes in the price indices when the oil price change exceeds the threshold level however international oil price shocks still affect the wholesale price index through the effects of announcement and expectation therefore controlling domestic oil prices to prevent volatility in the price indices is ineffective if we focus on the period when the left wing party is in power we also find that changes in international oil prices have more critical effects on the price indices than changes in domestic oil prices however the lead lag relationship between changes in domestic oil prices and changes in the price indices vanishes except with respect to the transportation category where the consumer price index is affected by domestic oil prices this result may be due to the government s extensive intervention in setting oil prices

oil price agricultural commodity prices and the dollar a panel cointegration and causality analysis abstract this study examines the dynamic relationship between world oil prices and twenty four world agricultural commodity prices accounting for changes in the relative strength of us dollar in a panel setting we employ panel cointegration and granger causality methods for a panel of twenty four agricultural products based on monthly prices ranging from january 1980 to february 2010 the empirical results provide strong evidence on the impact of world oil price changes on agricultural commodity prices contrary to the findings of many studies in the literature that report neutrality of agricultural prices to oil price changes we find strong support for the role of world oil prices on prices of several agricultural commodities the positive impact of a weak dollar on agricultural prices is also confirmed

the effect of global oil price shocks on china s agricultural commodities abstract this paper studied the effect of global oil price shocks on agricultural commodities in china including strong wheat corn soybean bean pulp cotton and natural rubber we regarded oil price volatility process as a combination of continuous process and jump process we not only separated oil price shocks into positive and negative categories to identify different effects on agricultural commodities in continuous process but also investigated how jump behavior influenced these agricultural commodities we found that the oil price was characterized by volatility clustering and jump behavior at the same time oil price shocks had different effects on agricultural commodities in addition the shocks on most agricultural commodities were asymmetric only natural rubber was under influence of the jump intensity of the oil price in contrast to strong wheat corn soybean bean pulp and cotton

long memory and structural breaks in the returns and volatility of gold evidence from turkey this article examines the long memory properties and structural breaks in spot and futures gold returns and volatility in turkey the data cover the period from 2008 through 2013 in which gold prices hit an all time high arfima figarch model provides evidence of dual long memory in spot series and a lack of long memory property in futures returns anti persistence in spot returns is indicative of an overreaction of gold prices to new information thus disconfirming the weak form of market efficiency the findings further provide evidence of one structural break which is associated with correction in the gold prices during the post global financial crisis the analyses suggest that the long memory is true not spurious this implies that long memory is a feature of the data instead of an outcome of structural changes

does inflation cause gold market price changes evidence on the g7 countries from the tests of nonparametric quantile causality in mean and variance this paper utilises the newly proposed nonparametric causality in quantiles test to examine the predictability of mean and variance of changes in gold prices based on inflation for g7 countries the causality in quantiles approach permits us to test for not only causality in mean but also causality in variance we start our investigation by utilising tests for nonlinearity these tests identify nonlinearity showing that the linear granger causality tests are subject to misspecification error unlike tests of misspecified linear models our nonparametric causality in quantiles tests find causality in mean and variance from inflation to gold market price changes between the 0 20 quantile and the 0 70 quantile implying that very low and high price changes in gold markets are not related to inflation these changes should be related to other sources such as financial shocks and exchange market shocks we find support that gold serves as a hedge against inflation but only in the mid quantile ranges i e quantiles from 0 20 to 0 70 our results show that gold does not serve as a hedge against inflation during periods when gold market price changes are very low or very high which are respectively quiet and highly volatile periods

level playing fields and laissez faire postliberal development strategy in inegalitarian agrarian economies focusing on the rural sector in latin america this paper explores the microeconomic linkages between distribution and growth which drive the possible reproduction of rural poverty over time the result of this exploration is a neostructuralist perspective which argues that actually existing laissez faire agrarian economies do not present a level playing field and that low wealth farms face disadvantages which tend to reproduce or even deepen sectoral inequality the paper then tries to identify the sorts of public policy and collective action which might modify the nature of growth and distribution in post liberalization agrarian market economy

innovation in rural finance indonesia s badan kredit kecamatan program abstract donor agencies and governments are committing increasing resources to microenterprise credit programs much as they earlier funded rural credit yet few programs embody the lessons from this earlier experience central java s badan kredit kecamatan program shows considerable promise in providing the access convenience and flexibility desired by poor borrowers while assuring the financial viability of the credit institution by minimizing administrative costs and imposing interest rates sufficient to cover costs and prevent capital erosion recent progress has also been made in mobilizing voluntary savings strong political support from the government has been crucial to the program s success

the effect of global oil price shocks on china s metal markets this paper investigated the impacts of global oil price shocks on the whole metal market and two typical metal markets copper and aluminum we applied the autoregressive conditional jump intensity arji model combining with the generalized conditional heteroscedasticity grach method to describe the volatility process and jump behavior in the global oil market we separated the oil price shocks into positive and negative parts to analyze whether oil price volatility had symmetric impacts on china s metal markets we further used the likelihood ratio test to examine the symmetric effect of oil price shocks in addition we considered the jump behavior in oil prices as an input factor to investigate how china s metal markets are affected when jumps occur in the global oil market in contrast to the existing research paying little attention to this issue our results indicate that crude oil price shocks have significant impacts on china s metal markets and the impacts are symmetric when compared with aluminum copper is more easily affected by oil price shocks

rural credit markets and institutions in developing countries lessons for policy analysis from practice and modern theory this article presents evidence of the failure of government intervention in rural credit markets of ldcs in the past three decades it then shows how lessons for policy analysis can be drawn from modern theory particularly those theories focussing on credit rationing in competitive markets and interlinking of credit contracts with labor and land contracts the article outlines the policy implications of these theories and finds them insufficient to account for the empirical evidence it contends that a more systematic and rigorous analysis of institutions and institutional environments is essential for understanding and implementing effective policy reforms of rural credit markets it presents suggestions for undertaking such an analysis

relationship between oil price and exchange rate by fda and copula this article investigates the relationship between daily crude oil prices and exchange rates functional data analysis is used to show the clustering pattern of exchange rates and oil prices over the time period through high dimensional visualizations we select exchange rates for important currencies related to crude oil prices by using the objective bayesian variable selection method the selected sample data exhibits non normal distribution with fat tails and skewness under the non normality of the return series we use copula functions that do not require to assume the bivariate normality to consider marginal distribution in particular our study applies the popular and powerful statistical methods such as gaussian copula partial correlations and gaussian copula marginal regression we find evidence of significant dependence for all considered pairs except for the mexican peso brent our empirical results also show that the rise in the west texas intermediate wti oil price returns is asso

world oil prices and agricultural commodity prices evidence from an emerging market abstract oil prices are thought to have direct effect on agricultural prices followed by an indirect effect through the exchange rate this paper examines the short and long run interdependence between world oil prices lira dollar exchange rate and individual agricultural commodity prices wheat maize cotton soybeans and sunflower in turkey to this end the toda yamamoto causality approach and generalized impulse response analysis for identification of the long and short run interrelationships are applied to the monthly data spanning from january 1994 to march 2010 the impulse response analysis suggests the turkish agricultural prices do not significantly react to oil price and exchange rate shocks in the short run the long run causality analysis reveals that the changes in oil prices and appreciation depreciation of the turkish lira are not transmitted to agricultural commodity prices in turkey hence our results support neutrality of agricultural commodity markets in turkey to both direct and indirect effects of oil price changes

the excess co movement of commodity prices reconsidered this paper provides an empirical reconsideration of evidence for excess co movement of commodity prices within the framework of univariate and multivariate garch 1 1 models alternative formulations of zero excess co movement are provided and corresponding score and likelihood ratio tests are developed monthly time series data for two sample periods 1960 85 and 1974 92 on up to nine commodities are used in contrast to earlier work only weak evidence of excess co movement is found

group lending sequential financing lender monitoring and joint liability abstract we develop a simple model of group lending based on peer monitoring and moral hazard we find that in the absence of sequential financing or lender monitoring group lending schemes may involve under monitoring with the borrowers investing in undesirable projects moreover under certain parameter configurations group lending schemes involving either sequential financing or a combination of lender monitoring and joint liability are feasible in fact group lending schemes with sequential financing may succeed even in the absence of joint liability though the repayment rate will be lower in the absence of joint liability however group lending with lender monitoring is unlikely to be feasible

a critique of traditional agricultural credit projects and policies abstract authors critique the results assumptions and policies commonly associated with agricultural credit projects in low income countries a summary of new views on these projects is present these views emphasize voluntary savings mobilization and positive real rates of interest several explanations are given for why few of these new views have been adopted by policymakers

determinants of credit rationing a study of informal lenders and formal credit groups in madagascar abstract previous research on the determinants of credit rationing focused exclusively on the behavior of formal lenders who contract directly with an individual borrower based on survey data from madagascar this paper presents an analysis of credit rationing by informal lenders and by members of community based groups that allocate formal group loans among themselves the results show that group members are able to obtain and to use locally available information about the applicant s creditworthiness in much the same way as informal lenders do both types of lenders use the applicant s debt servicing obligations and income as the main criteria for credit rationing this paper therefore empirically confirms theoretical arguments that community based groups have an information advantage over distant formal bank agents