Benefits of lending to own labourer instead of lending elsewhere in a developing country's rural market for credit

Lower Risk of Default
- When a landlord lends to his own labourer, there is a lower risk of default as the labourer is known to the landlord and has a personal relationship with him.
- In contrast, lending to a stranger in the rural market for credit carries a higher risk of default as the lender has no personal relationship with the borrower.

Lower Transaction Costs
- Lending to own labourer involves lower transaction costs as compared to lending to a stranger in the rural market for credit.
- There are no intermediaries involved and hence the landlord can save on transaction costs such as loan processing fees, appraisal fees, etc.

Higher Flexibility
- Lending to own labourer provides higher flexibility as compared to lending in the rural market for credit.
- The landlord can decide the terms and conditions of the loan based on the borrower's needs and requirements.
- This flexibility is not available in the rural market for credit where lenders have fixed terms and conditions.

Better Control
- Lending to own labourer allows the landlord to have better control over the loan as he is aware of the borrower's income level, repayment capacity, and other related factors.
- In contrast, lending in the rural market for credit involves a certain degree of uncertainty and the lender may not have full control over the loan.

Improved Social Relations
- Lending to own labourer can lead to improved social relations between the landlord and the borrower.
- This can benefit the landlord in the long run as it can lead to increased loyalty from the borrower and can also improve the overall social environment in the rural community.

Overall, lending to own labourer can be a beneficial option for landlords in developing countries as it can lead to lower risk of default, lower transaction costs, higher flexibility, better control, and improved social relations.