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Facilitating the Provision of Farm Credit: The Role of Interlocking Transactions Between Traders and Zamindars in Crop Marketing Systems in Sindh

Authors
Journal
World Development
0305-750X
Publisher
Elsevier
Publication Date
Volume
27
Issue
2
Identifiers
DOI: 10.1016/s0305-750x(98)00140-5
Keywords
  • South Asia
  • Sindh
  • Interlocking Transactions
  • Marketing
  • Nie
  • Credit

Abstract

Abstract Formal credit institutions in Pakistan have largely failed to provide access to farm credit to small and medium-scale landowners, or zamindars. This paper examines interlocked transactions between traders and landowners in the cotton and wheat markets in Sindh that facilitate the provision of credit by traders. It is concluded that the case examined provides an example where traders lend to landowners in a segment of the credit market that approximates competitive behavior, without surplus extraction by traders. Key conditions resulting in this favorable outcome are the existence of both competition for market share and information sharing on borrowers between traders. Whether this outcome is also beneficial for other rural groups who may borrow from landowners, in particular sharecropping tenants, is independent of market relations between landowners and traders and is not determined here.

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