Institutional and Non-Institutional Credit among Two Villages from Tamil Nadu and Karnataka in India

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Suresh Mani
Ramaprabha D.
Ramakrishnan K.
P. Rajalingam Goud


Institutional and non-institutional credit made up the two sectors that made up India's rural lending structure. The current study focuses on two villages from Tamil Nadu and Karnataka, two southern Indian states. Both villages were irrigated in two regions. Data on 120 households is gathered from two villages from Tamil Nadu and Karnataka. There has been attempt to understand difference between institutional and institutional credit between two regions by using cross tabulation and percentage analysis.There has attempt to identify the groups among two regions based some homogeneity by using K-mean cluster analysis for understanding preference of institutional credit.Gold and land continue to be the most popular collateral. We discovers that collaterals play a role in the formal economy and that there is evidence of interlinking transactions in informal loans in Karnataka village. Fertilizers other inputs are provided by cooperatives which replaced the role of the commission agents and therefore the traders in Tamil Nadu. Cluster analysis showed that in Tamil Nadu village, cluster formation was significantly influenced by the head's age and level of education. Age of the Head and Operated Land affected the development of the cluster in the Karnataka village.

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