Welfare impacts of rural credit and saving program in Kurfa Chele district, eastern Ethiopia: a propensity score matching estimation
ISSN: 0002-1466
Article publication date: 19 January 2021
Issue publication date: 8 July 2021
Abstract
Purpose
This study is conducted to evaluate the impact of rural credit on farm household income and food security.
Design/methodology/approach
A multistage random sampling procedure is implemented to select 180 (82 credit user and 98 non-credit user) households from Kurfa Chele district, eastern Ethiopia. The Propensity Score Matching technique is used to estimate the impact of credit utilization on the welfare indicators.
Findings
The results of the econometric model estimation show that participation in the rural credit program was positively influenced by a household's educational status, family size, voluntary saving and participation in training related to credit and saving. On the contrary, livestock holding and extension advice were found to negatively affect participation. Furthermore, participation in rural credit program is found to increase annual income by 59% and calorie intake by 21%. These are significant results implying that participation in the rural credit and saving program improved household welfare in the study area.
Originality/value
This study is important because it shows the welfare impact of making credit program available to potential users in the study area. Moreover, for effectiveness of the credit program it is necessary to target households with relatively larger family size and those with relatively better education (to induce change among the wider farming community). It is also essential to focus on the saving behavior of the program beneficiaries and enhancing the management system by ensuring that sufficient development agents are in place.
Keywords
Acknowledgements
The authors would like to thank Prof. Calum Turvey, Associate Editor of Agricultural Finance Review, for his insightful comments, criticisms and suggestions on the earlier versions of the article. We also thank the enumerators, respondents, local administrators, and staff of Oromia Credit and Saving Share Company for their active involvement, facilitation and smooth implementation of this research.Declarations of interest: The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.Funding: This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors.Contributors: ENO also designed and supervised the study. MGW designed and implemented the research. JYH supervised the research and drafted the manuscript. MB facilitated the collection and analysis of primary data. MGW and ENO also analyzed data, interpreted and prepared the revised manuscript. All authors have read and approved the final version of the article.
Citation
Okoyo, E.N., Wordofa, M.G., Hassen, J.Y. and Bezabih, M. (2021), "Welfare impacts of rural credit and saving program in
Publisher
:Emerald Publishing Limited
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