Evaluating the Effect of Transaction Costs on Farmer's Access to Formal Credit Markets in Iran

This paper evaluates the impacts of transaction costs on accessing to credit market. The data was collected using a sample of 459 rural households from Khorasan, Mazandaran, East Azarbayejan and Lorestan Provinces in Iran during the year 2006. After a descriptive analysis of the sample, the Logit model was used to evaluate the impacts of some factors, especially transaction costs on rural household access to credit market. The results revealed that a close distance to financial centers, the availability of information onbanking system and also membership of farmers in Gharzolhasaneh funds and co-operatives, as indexes of transaction costs, increase the accesses of farmers to credit markets. Finally, transaction costs could be considered as an important limitation in accessing to the credit market in rural areas.