Agric. Econ. - Czech, 2024, 70(2):49-59 | DOI: 10.17221/341/2023-AGRICECON

Increasing Boro rice productivity through credit: Evidence from BangladeshOriginal Paper

Shah Johir Rayhan ORCID...1,2, Md. Sadique Rahman2, Kaiyu Lyu1
1 Institute of Agricultural Economics and Development, Chinese Academy of Agricultural Sciences (CAAS), Beijing, P.R. China
2 Department of Agricultural Finance and Management, Sher-e-Bangla Agricultural University, Sher-e-Bangla Nagar, Dhaka, Bangladesh

Rice productivity needs to be increased to feed Bangladesh’s growing population. Productivity can be increased by adopting improved varieties and management practices, which require additional capital inputs. In this article, we aim to estimate the effect of formal and semiformal credit on rice productivity in Bangladesh. We surveyed 500 rice farmers to achieve these objectives. We used descriptive statistics, propensity score matching and Heckman’s endogenous treatment effect model to analyse the data. The findings indicate that literacy, television ownership and training positively influenced access to formal credit. In general, credit recipients achieved higher productivity than did non-recipients. In the situation of credit source-specific effect, we found mixed results. Given the estimated difference of 438 kg/ha to 495 kg/ha, the results indicated that formal credit recipients had significantly higher productivity than did formal credit non-recipients. In contrast, endogenous treatment effect model results suggested that both formal and semiformal sources of credit had a significant effect on rice productivity. Increased agricultural loan disbursement through formal and semiformal credit institutions is strongly advocated. Farmers’ decision-making abilities regarding the most effective source of credit can be improved through training in financial literacy. The central bank of Bangladesh, along with the credit regulatory authorities of non-governmental organisations, can implement appropriate agricultural credit programmes for farmers.

Keywords: agricultural loan; formal credit; Heckman’s endogenous treatment effect; propensity score matching; semiformal

Received: October 12, 2023; Revised: February 6, 2024; Accepted: February 7, 2024; Published: February 28, 2024  Show citation

ACS AIP APA ASA Harvard Chicago Chicago Notes IEEE ISO690 MLA NLM Turabian Vancouver
Rayhan SJ, Rahman MS, Lyu K. Increasing Boro rice productivity through credit: Evidence from Bangladesh. Agric. Econ. - Czech. 2024;70(2):49-59. doi: 10.17221/341/2023-AGRICECON.
Share...
Download citation
  • BibTeX (.bib)
  • Bookends (.ris)
  • EasyBib (.ris)
  • EndNote (.enw)
  • EndNote 8 (.xml)
  • ISI WoS (.isi)
  • Medlars (.medlars)
  • Mendeley (.ris)
  • MODS (.xml)
  • Papers (.ris)
  • RefWorks (.txt)
  • RefManager (.ris)
  • RIS (.ris)
  • MS Word (.xml)
  • Zotero (.ris)
    • Open full article

    Supplementary files:

    Download file341-2023-AGRICECON_ESM.pdf

    File size: 160.47 kB

    References

    1. Abate G.T., Rashid S., Borzaga C., Getnet K. (2016): Rural finance and agricultural technology adoption in Ethiopia: Does the institutional design of lending organizations matter? World Development, 84: 235-253. Go to original source...
    2. Abdallah A., Ayamga M., Awuni J.A. (2019): Impact of agricultural credit on farm income under the Savanna and Transitional zones of Ghana. Agricultural Finance Review, 79: 60-84. Go to original source...
    3. Agbodji A.E., Johnson A.A. (2021): Agricultural credit and its impact on the productivity of certain cereals in Togo. Emerging Markets Finance and Trade, 57: 3320-3336. Go to original source...
    4. Akter T., Parvin M.T., Mila F.A., Nahar A. (2019): Factors determining the profitability of rice farming in Bangladesh. Journal of Bangladesh Agricultural University, 17: 86-91. Go to original source...
    5. Awotide B.A., Abdoulaye T., Alene A., Manyong V.M. (2015): Impact of access to credit on agricultural productivity: evidence from smallholder cassava farmers in Nigeria. In: International Conference of Agricultural Economists (ICAE), Milan, Aug 9-14, 2015: 34.
    6. BBS (2020): Statistical Year Book of Bangladesh. Dhaka, Statistical Division, Ministry of Planning, Government of the People's Republic of Bangladesh. Available at https://bbs.gov.bd/site/page/29855dc1-f2b4-4dc0-9073-f692361112da/- (accessed Apr 8, 2022).
    7. Bhandari P.B. (2013): Rural livelihood change? Household capital, community resources and livelihood transition. Journal of Rural Studies, 32: 126-136. Go to original source... Go to PubMed...
    8. Bidisha S.H., Khan A., Khondker B.H., Khalid I. (2015): Returns to agricultural microcredit: Quasiexperimental evidence from Bangladesh. Bangladesh Development Studies, 38: 31-46. Go to original source...
    9. Bidisha S.H., Khan A., Imran K., Khondker B.H., Suhrawardy G.M. (2017): Role of credit in food security and dietary diversity in Bangladesh. Economic Analysis and Policy, 53: 33-45. Go to original source...
    10. Chandio A.A., Jiang Y., Wei F., Guangshun X. (2018): Effects of agricultural credit on wheat productivity of small farms in Sindh, Pakistan: Are short-term loans better? Agricultural Finance Review, 78: 592-610. Go to original source...
    11. Danso-Abbeam G., Ehiakpor D.S., Aidoo R. (2018): Agricultural extension and its effects on farm productivity and income: insight from Northern Ghana. Agriculture and Food Security, 7: 74. Go to original source...
    12. Deb L., Sarkar M.A.R., Rahaman M.S., Asaduzzaman M., Siddique M.A.B. (2020a): Agricultural credit and profitability of MV Boro rice cultivation at farm level in some selected areas of Chapai Nawabganj district. Journal of Bangladesh Agricultural University, 18: 667-673. Go to original source...
    13. Deb L., Sarkar M.A.R., Siddique M.A.B., Begum R. (2020b): Is agricultural credit programme effective in Boro cultivation? Evidence from state-owned Bank of Mymensingh District. Bangladesh Rice Journal, 24: 85-95. Go to original source...
    14. Ewoi L.J., Ali B.A., Stephen M. (2023): Effect of education on microfinance institutions' credit accessibility by persons with disabilities in Mombasa County, Kenya. Journal of Economics, Management and Trade, 29: 44-54. Go to original source...
    15. FAO (2023): Credit to Agriculture. Global and Regional Trend 2013-2022. Rome, Food and Agriculture Organization of the United Nations: 7.
    16. Gujarati D.N., Porter D.C. (2009): Basic Econometrics. 5th Ed. Ney York, McGraw-Hill/Irwin: 922.
    17. Haryanto T., Wardana W.W., Jamil I.R., Brintanti A.R.D., Ibrahim K.H. (2023): Impact of credit access on farm performance: Does source of credit matter? Heliyon, 9: e19720. Go to original source... Go to PubMed...
    18. Heckman J.J. (1976): The common structure of statistical models of truncation, sample selection and limited dependent variables and a simple estimator for such models. Annals of Economic and Social Measurement, 5: 475-492.
    19. Heckman J.J. (1978): Dummy endogenous variables in a simultaneous equation system. Econometrica, 46: 931-959. Go to original source...
    20. Heckman J.J. (1979): Sample selection bias as a specification error. Econometrica, 47:153-161. Go to original source...
    21. Hoq M.S., Uddin M.T., Raha S.K., Hossain M.I. (2021): Welfare impact of market participation: The case of rice farmers from wetland ecosystem in Bangladesh. Environmental Challenges, 5: 100292. Go to original source...
    22. Jimi N.A., Nikolov P.V., Malek M.A., Kumbhakar S. (2019): The effects of access to credit on productivity: Separating technological changes from changes in technical efficiency. Journal of Productivity Analysis, 52: 37-55. Go to original source...
    23. Kabir M.S., Salam M.U., Islam A.K.M.S., Sarkar M.A.R., Mamun M.A.A., Rahman M.C., Nessa B., Kabir M.J., Shozib H.B., Hossain M.B., Chowdhury A., Nasim M., Iftekharuddaula K.M., Hossain M.S., Bhuiyan M.K.A., Karmakar B., Rahman M.S., Haque M.M., Khatun M.T., Ali M.P., Rabbi S.M.H.A., Biswas P.L., Rashid E.S.M.H., Rahman N.M.F. (2020): Doubling rice productivity in Bangladesh: A way to achieving SDG 2 and moving forward. Bangladesh Rice Journal, 24: 1-47. Go to original source...
    24. Li X., Gan C., Hu B. (2011): Accessibility to microcredit by Chinese rural households. Journal of Asian Economics, 22: 235-246. Go to original source...
    25. Luan D.X., Bauer S. (2016): Does credit access affect household income homogeneously across different groups of credit recipients? Evidence from rural Vietnam. Journal of Rural Studies, 47: 186-203. Go to original source...
    26. Mazumder M.S.U., Lu W. (2015): What impact does microfinance have on rural livelihood? A comparison of governmental and non-governmental microfinance programs in Bangladesh. World Development, 68: 336-354. Go to original source...
    27. Miah M.A.K., Alam A.K.M.A., Rahman A.H.M.A. (2006): Impact of agricultural credit on MV Boro rice cultivation in Bangladesh. Journal of Agriculture and Rural Development, 4: 161-168. Go to original source...
    28. Moahid M., Maharjan K.L. (2020): Factors affecting farmers' access to formal and informal credit: Evidence from rural Afghanistan. Sustainability, 12: 1268. Go to original source...
    29. Muhongayire W., Hitayezu P., Mbatia O.L., Mukoya-Wangia S.M. (2013): Determinants of farmers' participation in formal credit markets in rural Rwanda. Journal of Agricultural Sciences, 4: 87-94. Go to original source...
    30. Nordjo R.E., Adjasi C.K.D. (2020): The impact of credit on productivity of smallholder farmers in Ghana. Agricultural Finance Review, 80: 91-109. Go to original source...
    31. Nyaaba J.A., Nkrumah-Ennin K., Anang B.T. (2019): Willingness to pay for crop insurance in Tolon District of Ghana: Application of an endogenous treatment effect model. AIMS Agriculture and Food, 4: 362-375. Go to original source...
    32. Ouattara N.B., Xiong X., Traoré L., Turvey C.G., Sun R., Ali A., Ballo Z. (2020): Does credit influence fertilizer intensification in rice farming? Empirical evidence from Côte D'Ivoire. Agronomy, 10: 1063. Go to original source...
    33. Porgo M., Kuwornu J.K., Zahonogo P., Jatoe J.B.D., Egyir I.S. (2018): Credit constraints and cropland allocation decisions in rural Burkina Faso. Land Use Policy, 70: 666-674. Go to original source...
    34. Rabbi F., Ahamad R., Ali S., Chandio A.A., Ahmad W., Ilyas A., Din I.U. (2019): Determinants of commercialization and its impact on the welfare of smallholder rice farmers by using Heckman's two-stage approach. Journal of the Saudi Society of Agricultural Sciences, 18: 224-233. Go to original source...
    35. Rashid S., Sharma M.P., Zeller M. (2004): Micro-lending for small farmers in Bangladesh: Does it affect farm households' land allocation decision? The Journal of Developing Areas, 37: 13-29. Go to original source...
    36. Rayhan S.J., Rahman M.S., Lyu K. (2023): The role of rural credit in agricultural technology adoption: The case of Boro rice farming in Bangladesh. Agriculture, 13: 2179. Go to original source...
    37. Salima W., Manja L.P., Chiwaula L.S., Chirwa G.C. (2023): The impact of credit access on household food security in Malawi. Journal of Agriculture and Food Research, 11: 100490. Go to original source...
    38. Shelley I.J., Takahashi-Nosaka M., Kano-Nakata M., Haque M.S., Inukai Y. (2016): Rice cultivation in Bangladesh: Present scenario, problems, and prospects. Journal of International Cooperation for Agricultural Development, 14: 20-29.
    39. Tadesse M. (2014): Fertilizer adoption, credit access, and safety nets in rural Ethiopia. Agricultural Finance Review, 74: 290-310. Go to original source...
    40. Truong T.H.L., Le T.N.Q., Phan H.M. (2020): Formal versus informal credit: Which is better in helping rural areas in Vietnam? Journal of Asian Finance, Economics and Business, 7: 119-130. Go to original source...
    41. Vella F., Verbeek M. (1999): Estimating and interpreting models with endogenous treatment effects. Journal of Business and Economic Statistics, 17: 473-478. Go to original source...

    This is an open access article distributed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International (CC BY NC 4.0), which permits non-comercial use, distribution, and reproduction in any medium, provided the original publication is properly cited. No use, distribution or reproduction is permitted which does not comply with these terms.


    Return to the content