Chapter 56 Rural Financial Markets in Developing Countries

Conning, Jonathan; Udry, Christopher

doi:10.1016/s1574-0072(06)03056-8

Cited by 224 publications

(169 citation statements)

References 108 publications

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“…Complementing this literature there are studies about microfinance institutions in developing countries, thus covering very small enterprises and households, i.e. an institutional environment close to our study (Conning andUdry, 2007, Hermes andLensink, 2007). It is revealing that most of these studies do not focus on collateral but rather on other means, in particular guarantees, to make loans enforceable (e.g.…”

Section: Empirical Literaturementioning

confidence: 94%

Collateral and its substitutes in emerging markets’ lending

Menkhoff

Neuberger

Rungruxsirivorn

2012

Journal of Banking & Finance

118

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Collateral and its Substitutes in Emerging Markets' Lending Abstract Due to opaque information and weak enforcement in emerging loan markets, the need for collateral is high, whereas borrowers lack adequate assets to pledge as collateral. How is this puzzle solved? We find for a representative sample from Northeast Thailand that indeed most loans do not include any tangible assets as collateral. Instead, lenders enforce collateral-free loans through third-party guarantees and relationship lending, but also through modifying loan terms, such as reducing loan size. Guarantees are the relatively most important substitute, they reduce collateral requirements independently of relationship lending and they are more often used by formal financial institutions. Terms of use: Documents in EconStor mayJEL-Code: G210, O160.

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Section: Empirical Literaturementioning

confidence: 94%

Collateral and its substitutes in emerging markets’ lending

Menkhoff

Neuberger

Rungruxsirivorn

2012

Journal of Banking & Finance

118

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“…By affecting inflation, interest rates, and exchange rates, monetary policy influences commodity storage, trade, and financial investments (Frankel 2006). Contract enforcement, rule of law, and effective government administration create the conditions for intermediaries to provide insurance and capital, thereby facilitating resource allocation and risk assessment (Levine et al 2000;Conning and Udry 2007). Governments' commitment to predefined trade principles allows private traders and stockholders to operate and smooth prices by exploiting arbitrage possibilities.…”

Section: Governmental Institutionsmentioning

confidence: 99%

Volatile and Extreme Food Prices, Food Security, and Policy: An Overview

Kalkuhl

Braun

Torero

2016

Food Price Volatility and Its Implications for Food Security and Policy

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“…High costs associated with monitoring borrowers and enforcing repayment where borrowers are liquidity constrained can lead to high interest rates or credit rationing (Conning and Udry 2007). Thus in settings with credit market frictions, agents may not be able to pay upfront for investments that generate future improvements in environmental quality, and therefore in income or health.…”

Section: Market Failures From Development Economicsmentioning

confidence: 99%

Envirodevonomics: A Research Agenda for a Young Field

Greenstone

Jack

2013

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Environmental quality in many developing countries is poor and generates substantial health and productivity costs. However, existing measures of willingness to pay for environmental quality improvements indicate low valuations by affected households. This paper argues that this seeming paradox is the central puzzle at the intersection of environmental and development economics: Given poor environmental quality and high health burdens in developing countries, why is WTP so low? We develop a conceptual framework for understanding this puzzle and propose four potential explanations: (1) due to low income levels, individuals value increases in income more than marginal improvements in environmental quality, (2) the marginal costs of environmental quality improvements are high, (3) political economy factors undermine efficient policy-making, and (4) market failures such as weak property rights and missing capital markets drive a wedge between true and revealed willingness to pay for environmental quality. We review the available literature on each explanation and discuss how the framework also applies to climate change, which is perhaps the most important issue at the intersection of environment and development economics. The paper concludes with a list of promising and unanswered research questions for the emerging sub-field of "envirodevonomics."

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Chapter 56 Rural Financial Markets in Developing Countries

Cited by 224 publications

References 108 publications

Collateral and its substitutes in emerging markets’ lending

Collateral and its substitutes in emerging markets’ lending

Volatile and Extreme Food Prices, Food Security, and Policy: An Overview

Envirodevonomics: A Research Agenda for a Young Field

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