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Risk, Credit Constraints and Financial Efficiency in Peruvian Agriculture

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  • Diana Fletschner
  • Catherine Guirkinger
  • Steve Boucher

Abstract

Based on a panel data set, we use a two-stage analysis to evaluate the effects of access to formal credit on financial efficiency of farms in northern Peru. The first stage uses non-parametric data envelope analysis to estimate farm-specific measures of financial efficiency; 28 per cent of farmers are financially inefficient and credit constraints reduce profits of these farmers by an average of between 17 and 27 per cent. The second stage uses Tobit regression to evaluate the determinants of financial inefficiency; the results point to uninsured risk as a key determinant of financial inefficiency and suggest that policies to strengthen agricultural insurance markets would likely pay large dividends in rural Peru.

Suggested Citation

  • Diana Fletschner & Catherine Guirkinger & Steve Boucher, 2010. "Risk, Credit Constraints and Financial Efficiency in Peruvian Agriculture," Journal of Development Studies, Taylor & Francis Journals, vol. 46(6), pages 981-1002.
    • Handle: RePEc:taf:jdevst:v:46:y:2010:i:6:p:981-1002
    DOI: 10.1080/00220380903104974
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    2. Unal Seven & Semih Tumen, 2020. "Agricultural Credits And Agricultural Productivity: Cross-Country Evidence," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 65(supp01), pages 161-183, December.
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    9. Jin, Man & Zhao, Shunan & Kumbhakar, Subal C., 2019. "Financial constraints and firm productivity: Evidence from Chinese manufacturing," European Journal of Operational Research, Elsevier, vol. 275(3), pages 1139-1156.
    10. UKWUABA, Ikenna Charles & OWUTUAMOR, Zechariahs Benapugha & OGBU, Cynthia C., 2021. "Assessment Of Agricultural Credit Sources And Accessibility In Nigeria," Review of Agricultural and Applied Economics (RAAE), Faculty of Economics and Management, Slovak Agricultural University in Nitra, vol. 23(2), January.
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    12. Turvey, C. G., 2017. "IFAD RESEARCH SERIES 10 - Inclusive finance and inclusive rural transformation," IFAD Research Series 280048, International Fund for Agricultural Development (IFAD).
    13. AGBENO, Yao, 2021. "Impact of Access to Agricultural Credit on the Productivity of Togolese Farmers," International Journal of Agricultural Sciences and Technology (IJAGST), SvedbergOpen, vol. 1(4), November.
    14. Nicolás de Roux, 2021. "Exogenous shocks, credit reports and access to credit: Evidence from colombian coffee producers," Documentos CEDE 19769, Universidad de los Andes, Facultad de Economía, CEDE.
    15. Reyes, Alvaro & Lensink, Robert & Kuyvenhoven, Arie & Moll, Henk, 2012. "Impact of Access to Credit on Farm Productivity of Fruit and Vegetable Growers in Chile," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126217, International Association of Agricultural Economists.
    16. Balana, Bedru & Oyeyemi, Motunrayo, 2021. "Credit Constraints and Adoption of Agricultural Technologies in Developing Countries? Evidence from Nigeria," 2021 Conference, August 17-31, 2021, Virtual 315347, International Association of Agricultural Economists.
    17. Romain Houssa & Paul Reding & Albena Sotirova, 2017. "Methodological issues of an impact evaluation of development support in agriculture," BeFinD Working Papers 0120, University of Namur, Department of Economics.
    18. Nicolás de Roux, 2020. "Weather Variability, Credit Scores and Access to Credit: Evidence from Colombian Coffee Farmers," Documentos CEDE 17800, Universidad de los Andes, Facultad de Economía, CEDE.
    19. Joseph Chisasa, 2016. "Determinants of the demand for credit by smallholder farmers: survey results from South Africa," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 9(1), pages 26-46.
    20. Sundar, B. & Virmani, Vineet, 2013. "Attitudes towards Risk of Forest Dependent Communities - Evidence from Andhra Pradesh," IIMA Working Papers WP2013-12-01, Indian Institute of Management Ahmedabad, Research and Publication Department.

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