Limited credit and high interest rates often appear as an impediment to agricultural
development, inhibiting the acquisition of capital necessary for modern agriculture. The
problems of adverse selection, moral hazard and other market imperfections may cause the
effective transaction costs to be so high, as to limit trade in or lead to the demise of those
markets (see Akerlof, 1970; Greenwald 1986; Stiglitz, 1982; 1994; Dowd, 1992). It is the
perception of this seemingly market failure that often results in pressure for government
intervention.