What farmers expect from the proposed formal agricultural credit policy: evidence from a randomized conjoint experiment in Nangarhar Province, Afghanistan
ISSN: 0002-1466
Article publication date: 19 January 2021
Issue publication date: 8 July 2021
Abstract
Purpose
This research measures the causal effects of pertinent agricultural credit policy attributes on farmers' participation probability and their willingness to pay (WTP) for agricultural credit and its associated services.
Design/methodology/approach
A randomized conjoint field experiment is conducted in three districts of Nangarhar Province, Afghanistan, capturing stated-preference data of 300 farmers. Each survey participant was provided with two hypothetical choices and one opt-out option to generate rankings based on their preferences. The levels of six attributes—namely, the credit service provider's location, the time required to obtain credit, the frequency of installments, the type of loan security, the provider of the credit services and the annual membership fee to participate in the proposed policy—are randomly assigned to produce the alternative choices.
Findings
The results reveal that farmers support the suggested agricultural credit services policy (ACSP), and the lower bound of their WTP for participation in the policy is as high as 5% of their average annual income.
Practical implications
This study provides evidence-based policy input for designing effective agricultural credit policies in Afghanistan, which can be extended to other countries with a similar context.
Originality/value
This is the first study estimating the causal effects of formal agricultural credit policy attributes on farmers' participation probability. Further, this study nonparametrically measures farmers' WTP for participation in the proposed policy.
Keywords
Acknowledgements
The authors thank Wahidullah Hussainzada at Balkh University and Nematullah Hotak at Hiroshima University for providing valuable research support. The authors also appreciate the Japan International Cooperation Agency (JICA) for facilitating Masaood Moahid’s scholarship.Funding: This work was supported by the Japan Society for the Promotion of Science (JSPS) grants [#20J13842 and #20K01632].
Citation
Moahid, M., Khan, G.D., Yoshida, Y., Maharjan, K.L. and Wafa, I.K. (2021), "What farmers expect from the proposed formal agricultural credit policy: evidence from a randomized conjoint experiment in Nangarhar Province, Afghanistan", Agricultural Finance Review, Vol. 81 No. 4, pp. 578-595. https://doi.org/10.1108/AFR-10-2020-0152
Publisher
:Emerald Publishing Limited
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