Durian trees (Durio zibethinus Murr.) in Javanese home gardens: their importance in informal financial systems

Abstract

Home gardens used to be an important source of income and wealth for many Javanese rural households. In the wake of economic development and income diversification processes, their role is increasingly linked to credit needs. People borrow money by pawning (gadai) trees from home gardens. The tree harvest is at the disposal of the lender during the loan period. Analysis of more than 80 oral gadai contracts on durian trees in West Java demonstrates that the real interest rate is not usurious and can be compared to other formal and informal credit interest rates. It also shows that distributions of loan rates and loan amounts do not differ according to their final use (consumption or investment) or to the family relationship between the two partners of the transaction.