ABSTRACT
A major problem for formal lenders is to reach those borrowers who fail to comply with their requirements, including provision of collateral. As a result, informal lenders continue to operate in credit markets along with formal lenders. This study examines the state of formal and informal credit markets in rural Bangladesh. It is specifically interested in illustrating rural credit markets by considering sources of loans, amount of loans, collateral against loans, areas where loans are used, repayment status and reasons for non-repayment of loans. The present research used secondary data collected from a rural credit survey conducted by the Bangladesh Bureau of Statistics. In order to analyze the data, simple descriptive statistics were used. The results show that rural people take various sizes of loans from formal and informal sources. Most loans are taken without collateral and they are used for both agricultural and non-agricultural purposes. The performance of loans is affected by various risks. The findings are expected to help policy makers and credit suppliers to gain better understanding about rural credit markets and set credit policies conducive to rural people.
