Interlocked factor market in agrarian sector: an overview of theoretical concept

Abstract

Informal credit sector plays a vital role in the rural sector in developing countries since formal credit institutions failed to provide access to rural credit to poor farmers. This study is an attempt to analyze various theoretical aspects of interlinked credit transactions in the rural credit market in developing countries. This is a qualitative approach and the relevant information were collected from secondary sources such as books and journals. Furthermore, this study tried to explain positive and negative theoretical concepts in regard to interlinked credit transactions in agrarian sector. The finding shows that the poor farmers in rural sector are exploited by lenders in the form of cash or kind or labour. However, the finding further indicates interlinked credit transactions may cause positive impacts in the rural credit markets. Hence, policy makers should give more focus on it to eradicate the above problem and should have a vibrant plan to give several subsidies to the poor, to make investment in rural areas, to strengthen easy marketing facilities etc.