Masaood Moahid, Ghulam Dastgir Khan, M.D. Abdul Bari and Yuichiro Yoshida
Natural calamities impair agricultural households' ability to invest in their farms. Facilitating access to agricultural credit may assist farmers in the face of negative revenue…
Abstract
Purpose
Natural calamities impair agricultural households' ability to invest in their farms. Facilitating access to agricultural credit may assist farmers in the face of negative revenue shocks. The aim of this study is to investigate the impact of agricultural credit on the agricultural input expenditure of disaster-affected farmers in Bangladesh.
Design/methodology/approach
The study utilizes data on 2,519 disaster-affected farming households from Bangladesh's Household Income and Expenditure Study (HIES) 2016–2017, which employs a nationwide representative five-year interval survey. Further, propensity score matching (PSM) identification strategy is used to estimate the average treatment effect on the treated (ATET), and Mahalanobis distance matching (MDM) is used for the robustness test. In addition, heterogeneous analysis has been conducted to explore the impact of agricultural credit on different types of farming households.
Findings
The findings reveal that access to agricultural credit has a favorable and significant effect on farm input expenditure for disaster-affected farmers. Therefore, agricultural credit accessibility could be utilized as a policy tool to assist disaster-affected farmers in improving their investment capacity, and hence, agricultural output.
Originality/value
This study, using a quasi-experimental design of access to agricultural credit on agricultural input expenditures of the disaster-affected farming households in coastal areas of Bangladesh to estimate the causal effect.
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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…
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.
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Emile Sègbégnon Sonehekpon and Rose Fiamohe
This study analyzes farmers' preferences for agricultural credit and its market structure in rural Benin using the conjoint analysis approach.
Abstract
Purpose
This study analyzes farmers' preferences for agricultural credit and its market structure in rural Benin using the conjoint analysis approach.
Design/methodology/approach
The data used come from primary sources collected from 228 randomly selected farmers. The conjoint analysis approach was used to produce the results. The bias associated with the heteroscedasticity of the error terms was fixed using the weighted least squares estimation method. Agricultural credit markets were segmented using the Calinski algorithm.
Findings
The study results reveal that farmers prefer a long-term agricultural credit with a low interest rate received via mobile banking. The interaction between a type of credit with collateral and a low interest rate is positively correlated with farmers' credit demand. The authors also found that agricultural credit markets are heterogeneous because of the heterogeneity in farmers' credit demand. This result has led to three different rural credit market segments identified in the selected study's sites. The market share simulation reveals a significant market share for the type of credit preferred by farmers in two segments.
Research limitations/implications
The proven evidence from this study can guide the development of appropriate agricultural financial products that promote financial inclusion among farmers in rural Benin. More specifically, agricultural financial policies that promote digital long-term credit with low interest rate and appropriate guarantee mechanisms can promote financial inclusion among farmers and reduce the problem of asymmetric information in agricultural credit market. The study also calls for the promotion of differentiated policies across the three identified segments in order to positively impact the welfare of all farmers.
Practical implications
The use of agricultural financial products that include digital long-term credit with low interest rate and appropriate guarantee mechanisms promote financial inclusion and reduce asymmetric information problems in agricultural credit markets in rural Benin.
Social implications
The promotion of long-term digital and cheap credit improves farmers household's wellbeing in rural Benin.
Originality/value
This study contributes to a better understanding of the structure of rural credit markets. It also reveals the most preferred characteristics of rural credit profiles by farmers. Besides, it validates the importance of the use of guarantee as an appropriate mechanism which minimizes the problem of asymmetric information between financial agents and farmers.
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Samuel Kwabena Chaa Kyire, Richard Kwasi Bannor, John K.M. Kuwornu and Helena Oppong-Kyeremeh
Credit is essential in the farm business because it facilitates the adoption of productive technologies such as irrigation. However, access to credit remains a significant hurdle…
Abstract
Purpose
Credit is essential in the farm business because it facilitates the adoption of productive technologies such as irrigation. However, access to credit remains a significant hurdle for sub-Saharan Africa, including Ghanaian farmers. Therefore, the authors assessed credit utilization and the intensity of borrowing by irrigated rice farmers in the Upper East region. In addition, how extension moderates the amount borrowed was analysed.
Design/methodology/approach
The multistage sampling approach was used in the study. The Tono and Vea irrigation schemes were purposively selected. Proportionally, 318 rice farmers were sampled from the Tono irrigation scheme and 159 from the Vea irrigation scheme. Cragg's double hurdle and moderation analysis were used.
Findings
It was uncovered that gender, age, years of farming, total farm size, rice farm size, contract farming and off-farm employment explain farmers' decision to borrow. On the other hand, the intensity of borrowing was influenced by gender, age, years of farming, rice farm size, contract farming and the number of extension contact. The moderation analysis revealed that extension contact improves the amount borrowed by farmers.
Research limitations/implications
While there are irrigated rice farmers in other regions of Ghana, this study was limited to rice farmers under the Tono and Vea Irrigation schemes in the Upper East region.
Originality/value
This study investigated the moderating role of extension contact on amount borrowed in Ghana. This makes a modest addition to the limited literature on the moderating role of extension and credit access.