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Article
Publication date: 19 January 2021

Masaood Moahid, Ghulam Dastgir Khan, Yuichiro Yoshida, Keshav Lall Maharjan and Imran Khan Wafa

This research measures the causal effects of pertinent agricultural credit policy attributes on farmers' participation probability and their willingness to pay (WTP) for…

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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.

Details

Agricultural Finance Review, vol. 81 no. 4
Type: Research Article
ISSN: 0002-1466

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