Empirical measurements of households' access to credit and credit constraints in developing countries: methodological issues and evidence.

Abstract

This paper presents a new methodological framework for measuring the level and household to bear the additional risk. A household determinants of household access to credit and may also benefit from mere access to credit, even if it credit constraints, and the effects of access to credit is not borrowing, because with the option of on household behavior and welfare. It also borrowing it can avoid adopting risk-reducing, but exemplifies the new methodology with data collected inefficient, income diversification strategies or engagin Malawi and Bangladesh on the extent of rural ing in precautionary savings with negative returns. households’ access to credit and credit constraints in For these reasons, most developing countries’ developing countries. governments and donors during the past 40 years