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Why do you think that the share of formal sector credit is higher for the richer households compared to the poorer households?
Richer households have a higher share of formal loans than poorer households because they are more educated than poorer households or because they know that banks offer loans at lower interest rates. Apart from this, rich families also have supporting loan documents and necessary paper forms to pledge in the bank in return for the loan received from the bank, while poor families lack all these.
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