In this paper, a model of interaction of formal and informal credit markets has been developed where the bank official (the ultimate provider of formal credit) faces a lending constraint. The bank official takes a bribe from the borrowers to disburse formal credit and he deliberately debars some...

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...

Gupta (1993) presented a theory of co-existence of interlinked credit-labour contract and interlinked credit-product contract in backward agriculture using the 'consumption efficiency hypothesis' of Leibenstein (1957). In this paper, we present an alternative theory of the two-tier interlinkage...

Gupta (1993) presented a theory of co-existence of interlinked credit-labour contract and interlinked credit-product contract in backward agriculture using the 'consumption efficiency hypothesis' of Leibenstein (1957). In this paper, we present an alternative theory of the two-tier interlinkage...

A model of interlinked credit-product contracts between small farmers and large farmers when the small farmer faces delay in getting formal credit and the large farmer does not, has been developed. The small farmer remains on the reservation income level, and his reservation income is inversely...

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...