An Analysis of Social Proximity and Interest Rate in Rural South India
Language
en
Article de revue
This item was published in
Economics & Sociology. 2018, vol. 11, n° 1, p. 156 - 171
English Abstract
In this article we present the role of social proximity in the formation of the interest rate in the informal credit market in the state of Tamil Nadu, India. This paper is unique in the sense that it deals with social ...Read more >
In this article we present the role of social proximity in the formation of the interest rate in the informal credit market in the state of Tamil Nadu, India. This paper is unique in the sense that it deals with social proximity and the formation of interest rate. If a lot of articles deal with the interest rate and social capital, none of them have attempted to link the two variables. A qualitative and quantitative survey was conducted on debt bondage in 2003-2004. The impact of social proximity defined as strong and weak is captured by a simple regression model. We show that a strong social proximity has a negative impact on the interest rate. Furthermore, the frequency of transactions has a positive impact on the interest rate, which means that asymmetrical information does not play a central role in our study. We then explain the relation between social proximity and interest rate by using the concept of rights and obligations.Read less <
English Keywords
India
Social proximity
Social Capital
Interest rate
Poverty Indebtedness
Seasonal migrants
Origin
Hal importedCollections