Demand for Formal and Informal Credit in Agriculture : A Case Study of Cotton Growers in Bahawalpur

The objective of the paper is to identify the determining factors of demand for formal and informal credit by cotton growers in Bahawalpur. The borrowing behavior of the farmers revealed that educated farmers and big farmers take loaning from the formal sector. The distance of the formal sector loaning agency, number of visits to take the loan, high transaction cost and bribe and corruption push the farmer towards informal loaning. To make the formal sector loaning effective, it is proposed to formal sector credit institutions to make the processing rapid and decrease the transaction cost. It is further proposed that for the far flung areas, the accessibility should be effective