Moneylending in Rural Areas of Latin America: Some Examples from Columbia.

This article offers empirical evidence of the existence of informal credit in rural areas of Latin America as of January 1971 and examines its implications for government attempts to grant institutional credit to farmers who have traditionally relied on informal credit. The article specifically cites examples of informal moneylending from Colombia. In the case of Latin America, a survey of studies reveals the scarcity of empirical evidence on informal credit transactions (that is, credit supplied by village store owners, itinerant traders, moneylenders, neighbors, relatives, landlords and friends), despite the importance of this type of credit in countries with poorly developed money markets. During a sample field survey of Colombian farm operators, nearly 60 percent of the 459 farmers interviewed claimed to have borrowed funds from informal credit suppliers, that is, landlords, itinerant traders, friends, neighbors, relatives, village store owners and moneylenders, from 1968 to 1971. Farmers were asked whether they preferred to utilize credits of private or state banks. Of the 458 farmers responding, 12.4 percent of the farmers preferred the private bank; 44.9 percent, the state bank; 3.5 percent preferred both and nearly 40 percent claimed they preferred neither one.