Assessing the Transaction Costs of Agricultural Bank Credits in Rural Iran

This study is conducted to examine the transaction costs of obtaining credit from Bank Keshavarzi (BK). High transaction costs are stated as an important factor that limits rural households to access credit in rural areas in developing countries. The data collected from the bank and also by a survey in a multi-stage sampling technique in 1383-1384. After estimating transaction costs of borrowing and lending, the econometric models used to determine the factors that affect the transaction costs of access to credits. The results highlight the importance of transaction cost in the borrowing and lending process. The results reveal that the transaction costs of gaining credit are equivalent to 915510 Rials, that is, an additional 2.68 percent annual interest cost. The average transaction costs of credit supply by BK is 3.4 percent of total costs. The econometric results showed that the size of loan and the experience, education level and information of the borrower are important determinants of the transaction costs.