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The present paper develops a model of vertical linkage between the formal and informal credit markets highlighting the presence of corruption in the distribution of formal credit. The existing moneylender, the bank official and the new moneylenders move sequentially and the existing moneylender...
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A theoretical analysis of interest rate determination in the informal credit market has been presented when the market for informal credit is created by inadequate supply of formal credit. The official of the formal credit agency controls the supply of formal credit and he gets a bribe from the...
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