I Fiance Apicultural

1,t
4 Finances are required to confier ownership rights to former tenaults
under land reform (Agricultural Finance Corporation 1988;
APRACA 1983; Bauier 1952; Belshaw 1959; Thailand, Cooperatives
Promotion l)eparrient 1979; B. M. DEsai 1989; Donald 1976; Firtl
and Yamcy 1964t; FAO 1973, 1974a, 197,b, 1975, 1976; Meats 1974;
Murray 1961; Reservc Bank of India I9,t5, 1992).
* Because resources of informal lenders are inadequate and illsuited
for tuodernization, they are unable to lend for long enough
periods for farmers to acquire [productive assets and market-purchased
modern yielcl-intioreasing inputs. Ifletce, the growth of'
informal lenders has been inelastic (Batier 1952; Bclshaw 1959;
Lele 17; Meats 191,; Mellor 1976; Rosegra t and Sitminwalla
1988; Rosen 1975).
* Informal eletes have not bci ablh to mobilize finan cial deposits
)ecause their deposit filcilities ate itnadeqtatc, ttsaflc, tInlrIustworthy,
or less remterative (1. M. l)esai 1989; Donald 1976; Von
Pisclike, Adams, and )otald 1983).
" The iniorimal credit nlrkt is fiagimnieitd, iilcirfect, atin isolated
(Bater 1952; elWshaw 1959; B. M. l)esai 1976; Filth and Yatiy
196,1; Nisbet 1969; Reserve Bank of India 19,15, 1951).
The extiil to which each of these tcasolis holds or (lifferent
countries varics, bill thre (.(-iclios aIr(. cl'at. First, the. teasotis are
essentially itiiversal. Seolid, te have titrelged frolll Ile thre basic
policy goals of RIlIs, tiwtiev, rural growiIh with equitv, iitegrallioll of"
rural fiancial iarkets, an(l econiomics of scale and scope. And third,
the(x)ericllce of a secular increase i thilte relative rol, of itstitittional
credit and tlie CotnSequent declinte iti inollisltlitutiotial loanis has occurred
in a wide varicty of coiiitis iti both dcvelopit tg aid daveloped rcgiotis
(Figures I and 2).
Based on tite-seties data or nine ,majorAsian counitries, Figure 1
shows, fitst, that the shame of instituiionial loans initIhe total aimount of
loans to farni households inceaseCd over linic in highlncolmle countries
(HICs), niiddle-iicotle Coniitics (M1(]s), and low-imcoiie Countries
(LICs) in Asia. Second(l, cotsidctiiig th ese ilitie Asian counltries at a
cotiiparal Sage of d(Clhiltimit, tliealverge share of iislitutonal
loans in ilt li presetnt I Is (Japall, laiwati, tie Republic of' Korea) was
geierally hiigiet ii Ihe 'arly 1950s imd 1960s (lit average of about 31
)et'ceit) Ihltaitn the l)rtselil lCs (Ihe- remiainiiig six cotlittis) illihle
early 1970s (ahouti 19 peteiilt). Third, lthe ill(i;se ilt ile pelceitage of'
institutional loatis ov(er tivi was iitch Iiiglier ill Asiall MICs (except
Taiwain) aild Asiani 1,ICs tianl inJapaii or 'aiwai. This is becaisc lhe
Asian MICs had ; iniiich lowcr shame of istitiluliotial loans to )egin with.
Moreover, betlweeiiJapalil and 'laiwai, the ilictielse ititheinstititiontal
share was siharlper iii laiwan. Both thcese facts sitgg(,sl that initial coiditions
related to R"Is wcrc nithillio1"e favorable in Japat Ilati iiltihe
LICs. This is also iitle for I'aiwant, followed b), the Rcpublic of Korea,
and thl Philippiines.
Ctoss-iialiotial shacs of, iistilitiotmal oaiis inthe imid- Io latc-1970s
rCitI'oitce the above coiclutsions (Figutc 2). ''hw shame of' institutiomial