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106 different forms of saving minus the cpected rate of inflation, which entails many conplex conceptual, Ilethodological, and time-consuming data problenis that are difficult to resolve. Most stu(lies, therefore, use the nominal interest rate oil one or the other form of financial saving minus the expected inflation rate. Thiis implies a perfectly conpetitive capital market, which equalizes the marginal rate of return ol each of the different formls of saving. But "capital iiarket" is im)erfCct by definition because it deals ill fulaire transactions. Moreover, ill the agicultural production process, many forms of capital are complenientary, and some even augment labor use, making it difficult to measure marginal rates of' return to capital or saving. And finally, care must be taken in deriving policy implications froni the impact of the Ieal interest rate ol saving, which is not always the case in the literature reviewed. Three of the four stu(lies on ,'Iial saving niasure incentive to save as gross farii revenue divided 1)byworking capital investnit, or )y Ihe value of farii assets other thal land, or by operating farn assets lagged one year (B. M. Desai 1975; 1lyun, Adams, and Ihlshak 1979; Ong 1972). Ilie fourth (Gupta 19701)) measures it as interest rate on treasuty bills illinus tile expected iniflation rate. A sttidy of tie United States imieastles incentives to save as net revemuic froill all properties divided by the \alue of all assets iiimis the expected inflation iate (Boskin 1978). All of the remaining live stuldics (Friend 1963; Giovatinitti 1983; Iouthakker 1965; Williamson 1968; Yusu f and Peters 1981) consider the nominal rate of interest oil 12-nionti deposits liniiuis ille ex)ected inflation rate. Most stidies mieasuire tlie eXr)cte ate of inflation as a weighted average of the past three or five years' actual inflation rate. Nonprice factors itt theil 0 studies include such (heteruinIiaits as perniiancmit and trallsitory inicome, wealth, family size, dependency ratio ill the family, farmit size, source ()f income, liquid assets, foreign saving, and inflation rate. These essentially represent the ability to save. Seven of the 10 studies estimate a single-equtatioti saving fuiction by utilizing an ordillta- least squares (OhS) statistical procedule, while the remaining threc ar- based oil a two-stage, least-squares instrumental variables (2SISIV) technique (Boskin 1978; Friend 1963; Giovannii 1983). This is perhaps bccause it is difficult to specify, estimate, and understand the results of a siiitnltatieous systeii. )es pite the lack of uniformnity !11tile (dcfilitions of saving an(l its (Iel'tlliialits, as well as the estimation Ill thods, it is instructive to considter these studies togethier and those that aldiess tlha issue of saving ill descriptive terls. The four studies on rural saving that ( 1uantitatively allow fvo analysis of both the ability to, save an(l iicctit ives are those on India (B. M. Desai 1975; Gupta 1970b), the Republic of Korea (Illyun, Adaitns, and Hushak 1979), and Taiwan (Ong 1972). The six studies (Gupta 1970c; Yusuf and Peters 198,1; Friend 1963; Boskin 1978; Williamson 1968; and Giovannini 1983) that analyze econo'iy-w%ide savings are those on Burna (Myanmar), Idia, Malaysia, the Philippines, Singapore, the Republic of Korea, TaiwanJapan, and tie United States. But there are as many as 21 other studies that examine the ability to save (piantitativcly and incentives to save in qualitative terms. Another group of 22 studies (eals desciptively with either ability or incentive to save or both. All these studies show that there
107 is substantial saving even in developing countries and, more itnportut, in their rural sectors. Tlie rest of the chap)ter deals largely wit the 10 quantitative studies, with occasional reference to the other studics. The results of 18 cases fr-oi the 10 quantitative studies are reported in Tables 50-53. With only a few exceptions, the specified nodels explain a large proportion of the variation in rural saving. A nunber of regression coefficients associated with the various explanatory variables are statistically significant. These tables also show the relative iinportance of price and nonprice factors in influencing rural and econony-wide saving. In Asia, nonl)ice factors are Inor, iniportant than price factors, no Table 50-Estimated multivariate models of supply of rural saving in two studies of India A District in India (B. M. Desai India (Gupta 1970b) 1975) Personal Urban Rural Rural Saving Ilousehold lousehold Household Variable per Capita Saving Saving Consumption Permanent inconie 0.17 (0.6)(3] 0.12 ,..3)'[ I1 0.02 (8.6).[21 Transitory income -0.,18 (-2 6)'111 -0.32 (-1.5)131 0.0,t (9.3) *11) Disposable Inrivate income (Curirent/lagged) ... ... ... 0.50 Inveise of disposable private income of tie (3.6)*[21 previous year Value of farm phis non. farm assets (excluding ... ... ... -6,047.39 (-0.4)(5) land) ... ... ... 0.94 (0.09)[41 Fanily size ... ... ... 34.45 Inteiaction of rate of Ietuln to working (4.7)* 11 capital and disposable private i cone ... ... ... -0.14 (-2.6)*[31 Real rate of interest 5.01 5.06 0.007 ... R2 (2.5)*[21 0.68 (2.5)*[2] 0.67 (1.0)[31 0.9.1 0.52 Number of observations 17 13 13 85 Note: Figures in parentheses are t-values, and figures in brackets are rank based on magnitude of the i-value (ignoting signs). *Significant at I percent.
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,AFOOD POLICY EVIEWl Institutional
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FOOD POLICY REVIEW 1 Institutional
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Chapter One Chapter Two Chapter Thr
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15. Unit transaction costs, unit ir
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47. Relative importance of intcecst
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Foreword Thiis report introduces a
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1 Summary This study analyzes two a
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3 Six organizational principles for
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2 Introduction Finance and Economic
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An obvious problem innate to an act
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9 Selection of Theme and Issues for
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I1 TIhe issue of scale economies is
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13 There is also a problem of indiv
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15 Figure I-Share of borrowing of f
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17 Figure 2-Share of'agricultural l
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19 specific or economywile developm
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Table 1- Continued 21 Region, Count
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Table 2-Continued Government Nation
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25 regional without higher or lower
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27 Caribbean, compared with Asia. T
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Table 3 -Continued Proportion of Pe
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31 LICs (including Bangladesh, Indi
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33 Functional Structure of RFIs and
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35 approximated from available lite
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Figure 3-Stylized organizational fr
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5 Transaction Costs, Profitability,
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411 or fiom new borrowers. Moreover
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43 Table 6-Unit transaction costs o
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45 tiotis largely by borrowing fi'o
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47 Table 9 -Transaction costs of br
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49 'T7heSonali Bank's unit uct marg
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Table 14-Estimated parameters of th
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53 PACS) was established ill March
Page 67 and 68: 55 Table 16-Deposit growth rates of
Page 69 and 70: 57 rIIIIal Output (28 p)Celt) and o
Page 71 and 72: 59 Although APS loans were dominant
Page 73 and 74: Table 2 0-Pattern of loans advanced
Page 75 and 76: 63 Table 2 1- Unit profit and unit
Page 77 and 78: 65 resources are mainly channeled t
Page 79 and 80: 67 Table 25-Various costs, gross ma
Page 81 and 82: 69 BAAC also en1joyced sc.;le ,~ol
Page 83 and 84: 71 iuzividual farmers at the distri
Page 85 and 86: 73 Agriculture and Cooperatives 197
Page 87 and 88: 75 like the county and plimaly coop
Page 89 and 90: 77 Table 33-Transaction and financi
Page 91 and 92: 79 Table 3 6 -Structure of assets a
Page 93 and 94: Response of Rural Loan Demand to In
Page 95 and 96: 83 Table 3 9-Estimated multivariate
Page 97 and 98: 85 Table 40-Estimated multivariate
Page 99 and 100: 87 separate deteriminants of demand
Page 101 and 102: Table 4 1-Continued Type of Demand,
Page 103 and 104: Table 4 1-Confinued Type of Demand,
Page 105 and 106: Table 4 2 -Evidence on interest ela
Page 107 and 108: 7 Response of Supply of Rural Depos
Page 111 and 112: 99 Table 4 6-Relative importance of
Page 113 and 114: 101 I1e positivc respolse of supply
Page 115 and 116: Table 48- Continued 103 eBased on t
Page 117: Table 4 9 -Pattern of total rural s
Page 123 and 124: 111 nient), and lastly, the inverse
Page 125 and 126: 113 Table 54-Positive and negative
Page 127 and 128: 9 Flow of Funds of the Rural Financ
Page 129 and 130: 117 interest I'evellie and payment.
Page 131 and 132: Table 5 5 -Continued 119 cin scenar
Page 133 and 134: 10 Conclusions and Implications ase
Page 135 and 136: 123 differential increase in demand
Page 137 and 138: 125 can be attained. Multifunctiona
Page 139 and 140: 127 fully achieved. Had the institu
Page 141 and 142: 129 so doing, improvements in verti
Page 143 and 144: The standard error of The standard
Page 145 and 146: Appendix 2 Reasons for Delinquency
Page 147 and 148: Region/Country 135 Reaso.z Near Eas
Page 149 and 150: References Abbott, J. C. 1 9 7 3a.
Page 151 and 152: 139 Aku, P. S. 1986. Lending to far
Page 153 and 154: 141 Caibbean Country Department II,
Page 155 and 156: 143 144. Princeton, N.J., U.S.A.: W
Page 157 and 158: 145 1975. Agriculturalcredit in Asi
Page 159 and 160: __ 147 Gurley, J. G., and E. S. Sha
Page 161 and 162: 149 G. Hunter and A. F. Bottrall, 5
Page 163 and 164: 151 Lee, T. Y., D. H. Kim, and D. W
Page 165 and 166: 153 __ _. 1976. The new economics o
Page 167 and 168: 155 Olu, W. 1985. Formal credit and
Page 169 and 170:
__ 157 Rao, B. P. 1970. The economi
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159 Singh, G., and S. R. Asokan. 19
Page 173 and 174:
-- 161 Verghese, S. K. 1983. tivfit
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