Farm credit access, credit constraint and productivity in Ghana: Empirical evidence from Northern Savannah ecological zone

Abstract

Purpose

The purpose of this paper is to examine farmers’ access to credit, credit constraint, and productivity in the Northern Savannah ecological zone of Ghana.

Design/methodology/approach

Secondary data from the Ghana Feed the Future baseline survey involving a total sample of 2,968 farm households were used. The conditional mixed process (CMP) framework was applied to estimate access to credit, credit constraint, and productivity simultaneously. As a system estimator the CMP corrects for possible heterogeneity and sample selection bias.

Findings

The results from the estimations revealed that age, literacy, farm non-mechanized equipment, and group membership were the variables influencing farmers’ access to credit. Credit constraint conditions were determined by household size, locality, group membership, and household durable assets. Finally, the results showed that productivity of farmers was dependent on marital status, household size, locality, farm size, commercialization, farm mechanized equipment, group membership, and household durable assets.

Originality/value

This paper is the first, to the best of the authors’ knowledge, to use the CMP framework to jointly estimate access to credit, credit constraint, and productivity. The results indicate that estimating credit access and constraint models separately would have yielded biased estimates. Thus, this paper informs future research on farmers’ credit access, credit constraint, and productivity for informed policymaking.

Citation

Sekyi, S., Abu, B.M. and Nkegbe, P.K. (2017), "Farm credit access, credit constraint and productivity in Ghana: Empirical evidence from Northern Savannah ecological zone", Agricultural Finance Review, Vol. 77 No. 4, pp. 446-462. https://doi.org/10.1108/AFR-10-2016-0078