Lending to Agribusinesses in Zambia



Figure 1. Inter-temporal Utility Maximization

The key implications from this simple two-period framework are:

1. The ratio of marginal utilities over consumption in the two periods
determines the choice of savings and investment.

2. The rate of return, r, is a key determining factor in the choice of
consumption or savings.

Logic Behind Borrowing

It is straight forward to adapt the model above to the situation of a consumer who would
prefer to borrow. Very low income individuals face a budget constraint so tight that C0 is
inadequate for sustaining a healthy life. In this instance, demand for loanable funds exists
to allow the budget constraint to be relaxed. For simplicity, consider an individual whose
current consumption is equal to income. Saving and investment for this individual is zero,
unless they borrow. If the individual borrows an amount B, then we can write the new
budget constraint as:



More intriguing information

1. The name is absent
2. MULTIPLE COMPARISONS WITH THE BEST: BAYESIAN PRECISION MEASURES OF EFFICIENCY RANKINGS
3. Constrained School Choice
4. Influence of Mucilage Viscosity On The Globule Structure And Stability Of Certain Starch Emulsions
5. A parametric approach to the estimation of cointegration vectors in panel data
6. Are class size differences related to pupils’ educational progress and classroom processes? Findings from the Institute of Education Class Size Study of children aged 5-7 Years
7. An Intertemporal Benchmark Model for Turkey’s Current Account
8. The name is absent
9. Commuting in multinodal urban systems: An empirical comparison of three alternative models
10. The name is absent