Transaction costs of farm credit in Asia: report of an APO seminar, 30th November-10th December 1993, Tokyo, Japan

Some of the problems associated with lending to small farmers are their geographically scattered location, smallness of loans, instability of rural incomes, lack of well-defined collateral and costly collection of information about borrowers. The resulting high transaction costs have discouraged financial intermediaries from providing more services in rural areas. They have also restrained farm households from using formal sources of credit. To assess the current situation of transactions costs of farm credit, a seminar was organized by the Asian Productivity Organization (APO) and held in Japan in 1993. The seminar identified major problems and explored possible reforms to reduce the burden on farmer-borrowers and increase small farmer access to credit. The fourteen country papers, seven resource papers and summary of findings are documented in this volume. The country papers cover: Bangladesh, India (two papers) Indonesia (two papers), Iran, Korea Republic, Mongolia, Nepal, Philippines (two papers), Sri Lanka, Taiwan and Thailand. The resource papers comprise: (1) an overview of rural financial services for small farmer development in Asia; (2) assessment of lending practices: problems and suggested solutions; (3) nature of transaction costs in rural credit delivery systems - a review of recent literature; (4) improvement of loan supervision for credit effectiveness: the case of the Japanese Agriculture, Forestry and Fisheries Finance Corporation (AFFFC); (5) the role of farmers' organizations in an effective credit delivery system - agricultural cooperatives in Japan; (6) transaction cost issues in rural finance: a review of the arguments and recent evidence in Asia; and (7) evaluation of farm credit in Asian countries.