Gine, Xavier2012-03-302012-03-302011Journal of Development Economics03043878https://hdl.handle.net/10986/5777This paper analyzes the mechanism underlying access to credit, focusing on two important aspects of rural credit markets. First, moneylenders and other informal lenders coexist with formal lending institutions such as government or commercial banks, and, more recently, micro-lending institutions. Second, potential borrowers presumably face sizable transaction costs in obtaining external credit. We develop and estimate a model based on limited enforcement and transaction costs that provides a unified view of these facts. Based on data from Thailand, the results show that the limited ability of banks to enforce contracts, more than transaction costs, is crucial in understanding the observed diversity of lenders.ENBanksOther Depository InstitutionsMicro Finance InstitutionsMortgages G210Economic Development: Financial MarketsSaving and Capital InvestmentCorporate Finance and Governance O160Economic Development: Regional, Urban, and Rural AnalysesTransportation O180Journal ArticleWorld Bank