Does experience with agricultural loans improve farmers' well-being? Evidence from Benin
ISSN: 0002-1466
Article publication date: 30 December 2020
Issue publication date: 8 July 2021
Abstract
Purpose
The purpose of this study is to examine the effect of loans provided by Benin's largest microlender.
Design/methodology/approach
A pipeline design and matching techniques contribute for identifying the causal effect. The loan treatment considered is loan experience. It includes program entry timing, take-up frequency and the amount obtained over six years. The study uses a cluster analysis to create comparison groups.
Findings
Experience with agricultural loans has a statistically significantly positive effect on recipients' farm income, food security and women's empowerment. Though unusual, these positive results can be credited to the very low rate of loan repurposing and mostly to the lender's rigorous loan implementation strategy.
Practical implications
The study results validate the hypothesis underlying development strategies that target women regarding loan programs. The study provides a simple yet valuable lesson for future credit impact evaluations: the context of the loan program as well as the evaluation indicators is essential.
Social implications
This study’s findings suggest that microcredit, when offered judiciously and with support, can improve farmers' conditions.
Originality/value
Given the relatively long period studied, the analysis has been innovative in defining loan treatment and creating reliable treatment groups. Also to the best of the authors’ knowledge, this study is the first of its kind in Benin.
Keywords
Acknowledgements
The KfW funded the research in this publication through the German Development Institute (DIE). The authors would like to thank Michael Bruentrup and Anne Floquet for providing insight and expertise that considerably helped the research. The content is solely the authors' responsibility and does not necessarily represent the views of these persons, the KfW or the DIE.
Citation
Sagbo, N.S.M. and Kusunose, Y. (2021), "Does experience with agricultural loans improve farmers' well-being? Evidence from Benin", Agricultural Finance Review, Vol. 81 No. 4, pp. 503-519. https://doi.org/10.1108/AFR-06-2020-0082
Publisher
:Emerald Publishing Limited
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