IDEAS home Printed from https://ideas.repec.org/p/fpr/ifprid/1974.html
   My bibliography  Save this paper

Are smallholder farmers credit constrained? Evidence on demand and supply constraints of credit in Ethiopia and Tanzania

Author

Listed:
  • Balana, Bedru
  • Mekonnen, Dawit Kelemework
  • Haile, Beliyou
  • Hagos, Fitsum
  • Yiman, Seid
  • Ringler, Claudia

Abstract

Credit constraint is considered by many as one of the key barriers to adoption of modern agricultural technologies, such as chemical fertilizer, improved seeds, and irrigation technologies, among smallholders. Past research and much policy discourse associates agricultural credit constraints with supply-side factors, such as limited access to credit sources or high costs of borrowing. However, demand-side factors, such as risk-aversion and financial illiteracy among borrowers, as well as high transaction costs, can also play important roles in credit-rationing for smallholders. Using primary survey data from Ethiopia and Tanzania, this study examines the nature of credit constraints facing smallholders and the factors that affect credit constraints. In addition, we assess whether credit constraints are gender-differentiated. Results show that demand-side credit constraints are at least as important as supply-side factors in both countries. Women are more likely to be credit constrained (from both the supply and demand sides) than men. Based on these findings, we suggest that policies should focus on addressing both supply- and demand-side credit constraints, including through targeted interventions to reduce risk, such as crop insurance and gender-sensitive policies to improve women’s access to credit.

Suggested Citation

  • Balana, Bedru & Mekonnen, Dawit Kelemework & Haile, Beliyou & Hagos, Fitsum & Yiman, Seid & Ringler, Claudia, 2020. "Are smallholder farmers credit constrained? Evidence on demand and supply constraints of credit in Ethiopia and Tanzania," IFPRI discussion papers 1974, International Food Policy Research Institute (IFPRI).
  • Handle: RePEc:fpr:ifprid:1974
    as

    Download full text from publisher

    File URL: https://www.ifpri.org/cdmref/p15738coll2/id/134152/filename/134363.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Christopher Mutungi & Julius Manda & Shiferaw Feleke & Adebayo Abass & Mateete Bekunda & Irmgard Hoschle-Zeledon & Gundula Fischer, 2023. "Adoption and impacts of improved post-harvest technologies on food security and welfare of maize-farming households in Tanzania: a comparative assessment," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 15(4), pages 1007-1023, August.
    2. Yao, Becatien & Shanoyan, Aleksan & Schwab, Ben & Amanor-Boadu, Vincent, 2023. "The role of mobile money in household resilience: Evidence from Kenya," World Development, Elsevier, vol. 165(C).

    More about this item

    Keywords

    ETHIOPIA; TANZANIA; EAST AFRICA; AFRICA SOUTH OF SAHARA; AFRICA; adoption; agriculture; technology; gender; smallholders; supply balance; credit; farmers; irrigation; agricultural techonologies; credit constraints; small-scale irrigation;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fpr:ifprid:1974. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/ifprius.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.