TITLE:
Formal-Informal Credit Market Interlinkage and Development Policies: A General Equilibrium Analysis
AUTHORS:
Rakhi Banerjee, Ranjanendra Narayan Nag
KEYWORDS:
Non-Traded Informal Sector, Modern Agriculture, Formal Credit and Informal Credit
JOURNAL NAME:
Modern Economy,
Vol.6 No.8,
August
20,
2015
ABSTRACT: Globalization has
brought about significant changes in the organization of production of emerging
market economies. One such change is an emergence of an advanced,
export-oriented rural agricultural sector. This advanced sector not only uses
land and labor but also uses formal credit for financing its production. This
growing importance of formal credit in the agricultural sector motivates us to
explore the implications of formal-informal credit market interlinkage using a
three sector General Equilibrium trade theoretic structure. In the present
paper, we would like to explore the implications of financial deregulation, an
increase in amount of formal credit and agricultural trade liberalization. The
focus of our examination has been on factor rewards, output composition and
national income of a transitional economy. Multiple cross effects, factor
intensity ranking and factor specificity are crucial in determining the
results.