Credit from whom and for what? The diversity of borrowing sources and uses in rural southern India

Abstract

This article aimed to deepen understandings of poor household borrowing practices by drawing on a case study from rural Southern India. It combines descriptive statistics and qualitative analysis to show that households juggle with a wide range of borrowing sources and that each serves very specific purposes. From a theoretical perspective, we suggest that the neoclassical cost/benefit framework often used to analyse debt decisions should be enlarged to include social criteria in line with recent insights from economic anthropology and political economy. From a policy perspective, we argue that all things being equal, local financial arrangements might have important comparative advantages over traditional microfinance products.

The Cost of Empowerment: Multiple Sources of Women’s Debt in Rural India

“…Evidence suggests that even women's microloans, meant for the promotion of selfemployment, are routinely diverted into consumption (Kalpana, 2008;Garikipati, 2008a;D'Espallier et al, 2011;Guérin et al, 2012). In fact, Collins et al (2009) argue that credit for consumption is a necessity in cash-strapped families.…”

Agricultural Workers, Credit Rationing and Family Networks in Rural Mexico

“…In subsequent work, however, Guirkinger (2008) presents evidence of market segmentation in rural Peru. Zeller (1994), Johnson (2005) and Guérin, Roesch, Venkatasubramanian, and D'Espallier (2012) also point in that direction.…”

Bonded Labour or What Else? A Case Study in Tamil Nadu, India

“…It is then crucial to distinguish between sources of credit. The different sources of credit are most of the time associated with different uses (Guérin et al , ). In fact, the households had the possibility of contracting loans from banks, self‐help groups (SHGs), moneylenders, pawnbrokers, relatives, friends, shop owners, shopkeepers and brokers.…”