Economic Affairs

Low credit participation rate and inadequate access to credit facilities is a common occurrence in developing economies. The study examines participation and access to credit in the rural households of Meghalaya using primary data collected in 2016. A total of 401 households were selected from two districts through multistage sampling technique. The paper explores the subject from two perspectives: one relating to factors associated with credit participation and the other relating to factors associated with access to credit. Participation in the rural credit markets is found to be associated with level of education of the spouse, main occupation of the household and income level of households. The study finds that credit is mostly demanded from banks with no evidence of money lenders operating in the surveyed areas. The average amount of loans borrowed from formal sources is found to be significantly larger than loans from informal sources. Although bank loans are of shorter duration, the processing time is actually longer than loans borrowed from informal sources. Uses of loans are found to be associated with sources of loans and loan size.