The purpose of this paper is to investigate factors affecting the adoption of agricultural technologies in Sub-Saharan Africa, specifically the role of credit market inefficiency…
Abstract
Purpose
The purpose of this paper is to investigate factors affecting the adoption of agricultural technologies in Sub-Saharan Africa, specifically the role of credit market inefficiency in adoption of agricultural technologies in the region.
Design/methodology/approach
Most importantly, the paper applies a 2SLS model on a unique data set on nine agrarian countries from Sub-Saharan Africa’s intensification of food crops agriculture (Afrint) to provide evidence on how credit market inefficiency affects adoption of technologies in the sub region.
Findings
The study finds that the relationship between credit and technology adoption is one-way causal relation (i.e. credit access leads to technology adoption) as opposed to a two-way relation (i.e. mutual dependent relation). Further, the results indicate that credit market inefficiency can be a major barrier to the adoption of yield enhancing technologies in Sub-Saharan Africa. Further, the study showed mixed results for household variables. The results give credence to studies that highlight the importance of infrastructure and risk control in the adoption of new technologies.
Research limitations/implications
The study is limited to only nine countries in Sub-Saharan Africa. Thus, the findings and interpretations should be considered as such. Further, there is the need for further research that considers all the region so as to establish whether or not there is a relationship between credit market inefficiencies and technology adoption in the region.
Practical implications
The policy implication is that microfinance institutions should consider scaling up their credit services to ensure that more households benefit from it, and in so doing technology adoption will be enhanced.
Originality/value
The main contribution of the study lies in its use of a unique data set from Sub-Saharan Africa’s intensification of food crops agriculture (Afrint) to investigation relationship between credit market inefficiency and technology adoption.
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Abdul-Hanan Abdallah, Micheal Ayamga and Joseph A. Awuni
The purpose of this paper is twofold: to determine the factors contributing to farm income in the Transitional and Savanna zones of Ghana and to ascertain variations between in…
Abstract
Purpose
The purpose of this paper is twofold: to determine the factors contributing to farm income in the Transitional and Savanna zones of Ghana and to ascertain variations between in the same and across the two locations; and to determine the impact of credit on farm income in each of the two zones and to ascertain the variation in impact of credit across the two locations.
Design/methodology/approach
In order to address endogeneity and sample selection bias, the authors draw from the theory of impact evaluation in nonrandom experiment, employing the endogenous switching regression (ESR) while using the propensity score matching (PSM) to check for robustness of the results.
Findings
The results show significant mean differences between some characteristics of households that have access to credit and those that did not have access. Further, the results revealed farm size, labor; gender, age, literacy, wealth and group membership as the significant determinants of both credit access and income in the two zones. With the ESR, credit access increases households farm income by GH¢206.56/ha and GH¢39.74/ha in the Transitional and Savanna zones, respectively, but with the PSM, credit increases farm income by GH¢201.50 and GH¢45.69 and in the Transitional and Savanna, respectively.
Research limitations/implications
The mean differences in characteristics of the households revealed the presence of selection bias in the distribution of household’s covariates in the two zones. The results further indicate the importance of productive resources, information and household characteristics in improved access to credit and farm income. Also, the results from both methods indicate that credit access leads to significant gains in farm income for households in both zones. However, differences exist in the results of PSM and that of the ESR results.
Practical implications
The presence of selection bias in the samples suggests that the use of ESR and PSM techniques is appropriate. Further, the results suggesting that enhanced credit access and farm income could be attained through improved access to household resources and information. The results also suggest the need for establishing and expanding credit programs to cover more households in both zones. The differential impact of credit between the two methods employed in each zone revealed the weakness of each model. The low values from PSM could indicate the presence of selection bias resulting from unobservable factors whiles the high values from the ESR could stem from the restrictive assumption of the model. This reinforces the importance of combining mixed methods to check robustness of results and to explore the weakness of each method employed.
Originality/value
The novelty of this study lies in the use of a very extensive and unique data set to decompose the determinants of credit access and farm income and as well as the impacts of credit into zones.
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The purpose of this paper is to examine the impact of agricultural credit on technical efficiency of Ghanaian maize farmers using a unique dataset drawn from the database of…
Abstract
Purpose
The purpose of this paper is to examine the impact of agricultural credit on technical efficiency of Ghanaian maize farmers using a unique dataset drawn from the database of Sub-Saharan Africa’s intensification of food crops agriculture (Afrint II) in 2008 period.
Design/methodology/approach
In this study, a two-stage estimation procedure is employed to determine impact of agricultural credit on technical efficiency of Ghanaian maize farmers. The first stage utilized probit model while the second stage utilized stochastic frontier approach to estimate impact of credit on technical efficiency of Ghanaian maize farmers.
Findings
The study found that farmers are producing below the frontier with average technical efficiency of 47 percent. Policy variables such as credit access; education, extension access and farm size played a stronger role in technical efficiency. Agricultural credit in particular increased technical efficiency by 3.8 percent.
Research limitations/implications
The results should not be extended to the impact of agricultural credit on economic efficiency since the allocative efficiency component is not considered in this study. Also, caution should be taken in the interpretation of these results because the data could not permit the incorporation of all variables that might affect technical efficiency.
Originality/value
The originality of the paper and its contribution to existing literature largely lies from the use of a unique dataset to find evidence of the impact of credit on efficiency in Ghana.
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Muazu Ibrahim, Alhassan Musah and Abdallah Abdul-Hanan
This paper aims to investigate the determinants of the motivation to pay tax in Ghana. Traditionally, raising tax morale to ensure compliance is often tied to the level of…
Abstract
Purpose
This paper aims to investigate the determinants of the motivation to pay tax in Ghana. Traditionally, raising tax morale to ensure compliance is often tied to the level of prevailing enforcement. But beyond enforcement, why do citizens pay tax?
Design/methodology/approach
This paper relied on the sixth wave of the World Values Survey data in determining the drivers of tax morale. It used the probit model with different specifications to determine robustness of the results.
Findings
The findings remain robust to model specification and show a non-linear relationship between age and tax morale. The level of education, marital status, patriotism, sector of employment, satisfaction with democracy and one’s “fear of God” do not matter in tax morale. The economic class of a person per se is also far from being a significant driver and that people are intrinsically motivated to pay tax once they are satisfied with their financial situation, have trust in the government as well as confidence in the parliament.
Originality/value
In addition to being a pioneering micro-econometric work on the determinants of tax morale in Ghana, the main contribution of the study lies in its investigation of a non-linear relationship between age and tax morale in Ghana.
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Raymond K. Dziwornu, Eric B. Yiadom and Sampson B. Narteh-yoe
The cost of agricultural loans is a major constraint to the growth of the agriculture sector. This paper examines agricultural loan pricing by banks in Ghana using panel data…
Abstract
Purpose
The cost of agricultural loans is a major constraint to the growth of the agriculture sector. This paper examines agricultural loan pricing by banks in Ghana using panel data analysis.
Design/methodology/approach
Data were obtained from audited financial reports of 15 agricultural loan lending banks from 2010 to 2017. The study applies the random-effect model and the fixed-effect model in the analysis and uses the system generalized system method of moment to check the robustness of the results from the baseline models.
Findings
The study found that agricultural loan pricing by banks is significantly influenced by risk premium, cost of funds, loan impairment, agricultural growth rate and food inflation. Banks should leverage emerging technologies to de-risk agriculture loan pricing to allay the fear of default. Farmers should look for long-term and relatively cheaper funds to support agricultural loans. Increasing credit to the agricultural sector could increase output, thereby reducing food inflation uncertainty for competitive pricing of agricultural loans.
Originality/value
Agriculture employs about 52% of Ghana's labor force, contributing about 20% to GDP. But it is “under” financed. This study leads the way in unraveling the factors accounting for the high prices of agricultural loans in Ghana. This study further contributes to policy development toward increasing credit to the agricultural sector.
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Fatima Mohammed, Michael J. Barrowclough, Michelle L. Kibler and Maria A. Boerngen
Financial inclusion is an issue of importance and increasing concern worldwide, particularly to policymakers across Africa and the rest of the developing world. The purpose of…
Abstract
Purpose
Financial inclusion is an issue of importance and increasing concern worldwide, particularly to policymakers across Africa and the rest of the developing world. The purpose of this paper is to investigate the level of usage of formal financial services among Ghanaian agricultural households as well as factors influencing these levels.
Design/methodology/approach
Financial inclusion indicators associated with the usage of formal financial services are selected from the 2017 Ghana Living Standard Survey. Using these indicators, an index measuring the level of usage of formal financial services is developed. A multinomial logistic regression model is implemented to analyze the possible effect that farm and household characteristics have on index measures.
Findings
Usage of formal financial services is very low among agricultural households, with many households using no financial products or services. Household expenditure, education, religion, geographic location, and the use of informal financial services were found to be consistent factors impacting household financial inclusion levels.
Practical implications
Findings may assist policymakers in designing policy schemes aimed at improving access to and usage of financial services for Ghanaian agricultural households. This may lead to a more inclusive financial system with the potential to improve the livelihood of agricultural households and contribute to Ghana's overall economic development.
Originality/value
A household-level index measuring usage of formal financial services was developed and characteristics influencing said index measures were examined, providing a more holistic view and understanding of factors influencing usage decisions.
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Abbas Ali Chandio, Yuansheng Jiang, Feng Wei and Xu Guangshun
The purpose of this paper is to evaluate the impact of short-term loan (STL) vs long-term loan (LTL) on wheat productivity of small farms in Sindh, Pakistan.
Abstract
Purpose
The purpose of this paper is to evaluate the impact of short-term loan (STL) vs long-term loan (LTL) on wheat productivity of small farms in Sindh, Pakistan.
Design/methodology/approach
The econometric estimation is based on cross-sectional data collected in 2016 from 18 villages in three districts, i.e. Shikarpur, Sukkur and Shaheed Benazirabad, Sindh, Pakistan. The sample data set consist of 180 wheat farmers. The collected data were analyzed through different econometric techniques like Cobb–Douglas production function and Instrumental variables (two-stage least squares) approach.
Findings
This study reconfirmed that agricultural credit has a positive and highly significant effect on wheat productivity, while the short-term loan has a stronger effect on wheat productivity than the long-term loan. The reasons behind the phenomenon may be the significantly higher usage of agricultural inputs like seeds of improved variety and fertilizers which can be transformed into the wheat yield in the same year. However, the LTL users have significantly higher investments in land preparation, irrigation and plant protection, which may lead to higher wheat production in the coming years.
Research limitations/implications
In the present study, only those wheat farmers were considered who obtained agricultural loans from formal financial institutions like Zarai Taraqiati Bank Limited and Khushhali Bank. However, in the rural areas of Sindh, Pakistan, a considerable proportion of small-scale farmers take credit from informal financial channels. Therefore future researchers should consider the informal credits as well.
Originality/value
This is the first paper to examine the effects of agricultural credit on wheat productivity of small farms in Sindh, Pakistan. This paper will be an important addition to the emerging literature regarding effects of credit studies.
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This study aims to shed light on Shari’ah supervisory boards (SSBs) and the possibilities of Islamic banks to reduce the tax avoidance. Performance and Shari’ah compliance have…
Abstract
Purpose
This study aims to shed light on Shari’ah supervisory boards (SSBs) and the possibilities of Islamic banks to reduce the tax avoidance. Performance and Shari’ah compliance have been extensively studied; however, tax avoidance remains a challenge.
Design/methodology/approach
SSB characteristics, based on resource dependence theory, influence tax avoidance, including SSB size, educational level, expertise, reputation, remuneration and turnover. The samples were obtained from Islamic banks in Indonesia and Malaysia (2010–2020) using the data panel method.
Findings
Islamic banks avoid taxes through the effective tax rate and book tax difference. SSBs who have more expertise play a role in investigating the complexity of tax avoidance, and SSB reputation, who is a member of the Islamic bank regulator, understands immorality, resulting in reduced tax avoidance. Moreover, the recruitment system has been effective, as SSBs with more expertise have become more prevalent. Meanwhile, SSB from a Shari’ah background works only in regulated areas, simplifying Shari’ah compliance, in particular, attestation of financial reporting. A heavy workload is created by cross-membership, resulting in the neglect of the immoral value of tax avoidance. The calculation of tax avoidance also includes remuneration and bank assets.
Practical implications
Given the uniqueness of Islamic banks contributing to social welfare, tax regulators need to review the appropriateness of fees that can be treated as taxes. Tax regulators can join hands with Islamic bank regulators on this review.
Originality/value
To the best of the authors’ knowledge, this study is one of the first to examine the characteristics of SSBs and Islamic banks on tax avoidance. Separating Islamic banks by country enriches the analysis.