Abstract
This study examined the performance of formal credit institutions that lend money for agricultural purposes. The study reviewed the performance of financial institutions their conduct of money lending with reference to rent-seeking and transaction cost. Study also investigated the small farmers’ access to private lenders and NGOs as last resort. It is argued that the large farmers had significant access to formal lending who afford transaction cost whereas, the smaller farmers find private money lender or NGOs though they charge higher rate of interest. Findings suggest that formal financial institutions e.g. banks are less accessible to smaller growers and NGOs and private lenders credit facility is not big enough to purchase inputs. In light of the findings of the study some policy implications have been discussed in the last section.
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