ABSTRACT
This chapter provides economic rationale and an organized “framework” to understanding the motivations and performance of nontraditional lenders. It examines and evaluates specific nontraditional lenders and their products. The chapter aims to help formulate expectations about the future role of nontraditional lenders in changing markets for agricultural capital. It presents brief evidence about the size and coverage of nontraditional lenders. The chapter provides a nontechnical interpretation of recent advances in the literature that can help provide a framework to assess the economics of intermediation by nontraditional capital suppliers. It examines competitive implications of the presence of nontraditional lenders for the industry and customers. The most visible nontraditional lenders are probably the equipment manufacturers’ captive vendor finance operations. The chapter concludes with some views on the future to highlight rapidly changing market segments that deserve future attention, and to highlight critical issues that will determine the future role of nontraditional lenders.
