The importance of credit market imperfections due to asymmetric information is multidimensional in the context of overall economic development. The inability of the banks to measure the degree of risk of defaults leads to credit rationing in most of the cases. Administered interest rates coupled...

This paper examines whether the presence of informal credit markets reduces the cost of credit rationing in terms of growth. In a dynamic general equilibrium framework, we assume that firms are heterogenous with different degrees of risk and households invest in human capital development. With...

One way to measure the lower steady state equilibrium outcome in human capital development is the incidence of child labor in most of the developing countries. With the help of Indian household level data in an overlapping generation framework, we show that production loans under credit...