Evaluation Investment Development Funds Loans in Agricultural sector of Iran In terms of Borrowing Transaction Cost

The purpose of this study is to assess the transaction cost of borrowing from non-governmental investment development Funds which are established in less than a decade. Transaction costs are considered as significant and limiting factors for micro-borrowers in using formal loans. The required data are provided by the Investment Developing Support’s Parent Company using the stratified random sampling method questionnaire during 1390. In the current study the effective factors of borrowing transaction cost in addition to the estimation of transaction costs of facilities are examined by econometric methods. The results show that transaction costs are controlled during the borrowing of Investment Development Funds and reduced in larger Funds with broader financial flows. Accordingly the rate of transaction cost in Esfahan Fund is calculated as 1.07% and in two smaller funds in Golestn and Qom are 1.27 and 3.29 respectively. The outcomes of econometric patterns indicate the importance of loan terms such as interest, loan amount, and deposit in addition to the borrower’ characteristics such as experience, education, training, criminal history and time used for reduction of transaction costs of facilities. Since the most of identified effective factors are related to the borrower’ characteristics and conditions, transaction costs for facilities can be decreased by focusing on the borrower through enhance his abilities and level of development. Developing the methods of group borrowing, common mechanism in lending investment development funds, can be considered as an effective solution in this regard.