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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:The Performance of Village Intermediaries in Rural Credit Delivery under Changing Penalty Regimes: Evidence from Senegal
Authors:Warning, Matthew
Sadoulet, Elisabeth
Periodical:Journal of Development Studies
Geographic term:Senegal
Subjects:agricultural credit
Agriculture, Natural Resources and the Environment
Development and Technology
Economics and Trade
External link:https://doi.org/10.1080/00220389808422557
Abstract:This paper examines the performance of the village intermediaries of the 'sections villageoises' in Senegal. The 'sections' were created in 1983 to replace State-controlled cooperatives and serve as the primary avenue through which formal agricultural credit is delivered to peanut producers in Senegal's Peanut Basin. In each 'section' a village intermediary is responsible for allocating credit among 'section' members. The analysis focuses on the screening behaviour of these intermediaries. The results show that, when the intermediaries expected to incur a substantial penalty in the event of borrower default, they engaged in appropriate screening, allocating credit to borrowers likely to repay their loans. When the default penalty was lowered, however, the intermediaries engaged in opportunistic screening, emphasizing political affiliation and consanguinity in their lending decisions. These results reveal both the potential efficacy of village intermediaries in allocating credit and their extreme sensitivity to penalty regimes. The paper is based on data from a survey of the heads of 95 farming households conducted in the Peanut Basin in 1992-1994. Bibliogr., notes, ref., sum.