Structure and Operation of Rural Interest Rates in Savings Mobilization and Extension of Credit in the Cross River

Abstract:

This study has provided information on the structure and operation of rural i n t e r e s t r a t e s i n savings mobilisation and extension of credit i n the Cross River State. A historical survey of interest rate i n the Christian religion showed that the Church prohibited i n t e r e s t r a t e s and established laws to discourage the giving and taking of interest, In the 11th Century however, there was a change in a t t i t u d e towards charging tnterest when commerce began finding new channels and the problem of trade became urgent. An examination of interest rate an3 Islamic law revealed is that Islam prohibits interest and thish- ased on two prinoipleca: i) that no one is to be allmwed any gain unless he is subjeatto loss fn the process. il) that no one should be given a,ny income o r any gain unless he. .... works for Lt. A study rf Islamic banks showed that t h e i r banking operationa are conducted fin s t r i o t oonformity with the tenets and rulings of Islamic faith. Free dealings and f a i r partnerships are the guidelines of Islamic Banks.Cost factor i n credit were examined and the s t u d y indicated that Transaction C o s t s and Changee i n the purchasing power of money were given as the main components of fanners borrowing costs. The determinants of rural i n t e r e s t r a t e s were also identified: