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Figure 4-Behavior of scale economies in transaction costs of sample branches of the Grameen Bank, Bangladesh, 1984-85 2.5 2.0 1.5 y '18 ________________________________ ].9 - 1 1 I I I 1I 1 I I I X 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4.500 5,000 5.500 Source: Derived from -,able 10. Notes: Y = Reciprocal of elasticity of Iransaclion costs with respect to volume of business. X = Volume of business (loans pts d e p osil babinces in lk 1,000). Sonali Bank, Bangladesh Sonali Bank, one of six nationalized comneeial banks iii Bangladesh, earned a positive unit net margin anl hence was viable during 1976-80 (Virnani 198,t). 1lowcver, it did not ak(- fil advantage of scAe econotiics in its adiniisirative or tilsactiotn costs. Tlcse costs could plausibly have bleen reduced by expanding its :'olunmc of operations, which are tnultiftictional. Tlle bank's rural nlcatthclte have elljoyed scale econotilies in tia nsac lion costs atnd aleat to have poteletial for diversifying thcir lending and itotletlditig operations. r)ttting t.,. period 1976-80, the ratio of, rural to urban brattwhes continuously increased: Ratio of' Rural Year to Urban Branches 1976 1.25 1977 1.58 1978 1.63 1979 2.01 1980 2.09
49 'T7heSonali Bank's unit uct margin is underestimated because gross Inarginl unit is computed as a simple average of the intercst spread oil loans to the farm sector alion, although the lmiak serves all sectors. fite Also l1llit.rliigili rt does ior irlcicle reventels Such as Cortinissiolis, batik gimantecs, atid check-clearing fees. which are earnings fromno finld-based prodIIcts 1ihat also entail a part of the sateIra sactionI costs. Sorali Bank's unit arid irrrerriclital tranisactiol costs varied, but only marginally (Tabhle I ).Average unit trainsaction costs were ornly percent 1.7 during 1976-80. Ihte umit gross imirgint averaged 3.A percenit, which (-aves a unit iiwi iargiii of 1.7 pirceu ;iier linit trallsactioll costs are subiiraclttd. The Sonllit I ilk ieilher suftf(Teed froi sclec disecol loi Cs nOl Clijo)e(d scal(e ecolioilires illtlese costs ('Table 12). This suggests that haiik the could realize firli-"t ecotiioti's of scie"arid irliprove its lillit tiiargii lier )y e'xpiidilig its vollillie oolt;lioris, especially inl rllirral for areas, two reaisois. lirst, ih( baik liats sigiiificanul, (.×l)uIepadcd its ruilal biiichlintwork, ;i showi ii t( t;ibl( oil the i page. Arid .scl(0ld, ttll l)i;ii('lis ;i( ilso viableh aid (ive .jo ye\d scal e 'oioiicis il thir tr icrioii costs ('I';Il)le.s 13 i1id11H). 1 lit tlr;tilsmcliori costs of tlhtese bIriliews declii.d sigilfic'ailil' with eIt(iicre;ise. illthe %'olhrieof their businiess. Moreover, Ihe low poili illutiil tralisictioll costs of bltich these es cotinis wiirt iirr scale of' opratiotis readics at least Tk tnillioni. 3 Illothter words, iliese braliel i s crl sple-(,d their CoilitiOl and joinlt cosls of tralactiol iolre olcelheir olpcitiiottis re;ilh this parricua" \;iluaue. Not Oilly woild this itake possible greater scale oilOlies, bill it would also iilrl)rovc t(Ir irrii il iligili, as is l( c;Ise for brallchcs Table Il-Unit and marginal transaction costs and viability of the Sonali Bank, Bangladesh, 1976-80 Varial~le in Fivv-Year ' Real 'W'rns Average 1976 1977 1978 1979 1980 Unit tiajisacijon costs b 1.65 1.75 1.19 1.7.1 1.58 Uiit gloss 1.69 nargin 3.10 3.t0 3.40 3.10 Unit 3.40 nelllmirgiln 3.t0 1. 75 1.65 1.91 1.66 1.82 1.71 Margiial ralsaction costs, 1.63 1.73 .t8 1.72 1.59 1.67 SourIce: Vitmani 1981. "Real term13sie derived by tll l~\.vioig tie agricuillral GD) delator to :1base year of 1972/73." I'Colilll I;s;1p(ei fltof 0ll lOltls giidiig plus de'postil Collpltlc I;MLiir.s. tihedifeic'iice hctssell tile 1tlii tenidiig I:3l' id the Siliiplt for i\'Clage depiosits rate aund tili.uices divided b ,,y 2. 'Hicse ais ale fool \galbitl 1 988 Weightedlltelael:lge a, ni 6. ould ot lie iise'dl bec~ase 1:131 ;I1li' no available. For reason, the Salle Uillii I'eclllles fizolii il(linlrelest',it aliill's (slch as Collinlissiois, banilk l'ees, forth) could ald so nlotle used lId ieiice tileillit gross iltaigiliIltt'teStiiliated. is Unxitgloss Derived froni nimrgin the estiilaed minuis tinlit doible-log iranlsactioin fiinciion. costs. ile iesltts of' which ale re p orted in Table 12.
Page 1 and 2:
,AFOOD POLICY EVIEWl Institutional
Page 3 and 4:
FOOD POLICY REVIEW 1 Institutional
Page 5 and 6:
Chapter One Chapter Two Chapter Thr
Page 7 and 8:
15. Unit transaction costs, unit ir
Page 9 and 10: 47. Relative importance of intcecst
Page 11 and 12: Foreword Thiis report introduces a
Page 13 and 14: 1 Summary This study analyzes two a
Page 15 and 16: 3 Six organizational principles for
Page 17 and 18: 2 Introduction Finance and Economic
Page 19 and 20: An obvious problem innate to an act
Page 21 and 22: 9 Selection of Theme and Issues for
Page 23 and 24: I1 TIhe issue of scale economies is
Page 25 and 26: 13 There is also a problem of indiv
Page 27 and 28: 15 Figure I-Share of borrowing of f
Page 29 and 30: 17 Figure 2-Share of'agricultural l
Page 31 and 32: 19 specific or economywile developm
Page 33 and 34: Table 1- Continued 21 Region, Count
Page 35 and 36: Table 2-Continued Government Nation
Page 37 and 38: 25 regional without higher or lower
Page 39 and 40: 27 Caribbean, compared with Asia. T
Page 41 and 42: Table 3 -Continued Proportion of Pe
Page 43 and 44: 31 LICs (including Bangladesh, Indi
Page 45 and 46: 33 Functional Structure of RFIs and
Page 47 and 48: 35 approximated from available lite
Page 49 and 50: Figure 3-Stylized organizational fr
Page 51 and 52: 5 Transaction Costs, Profitability,
Page 53 and 54: 411 or fiom new borrowers. Moreover
Page 55 and 56: 43 Table 6-Unit transaction costs o
Page 57 and 58: 45 tiotis largely by borrowing fi'o
Page 59: 47 Table 9 -Transaction costs of br
Page 63 and 64: Table 14-Estimated parameters of th
Page 65 and 66: 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 109 and 110: 97 Table 44-Estimated multivariate
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 and 118:
Table 4 9 -Pattern of total rural s
Page 119 and 120:
107 is substantial saving even in d
Page 121 and 122:
109 Table 52-Estimated multivariate
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
Page 171 and 172:
159 Singh, G., and S. R. Asokan. 19
Page 173 and 174:
-- 161 Verghese, S. K. 1983. tivfit
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