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Impact of financial inclusion on technical efficiency of paddy farmers in Bangladesh

Author

Listed:
  • Sonia Afrin
  • Mohammed Ziaul Haider
  • Md. Sariful Islam

Abstract

Purpose - The purpose of this paper is to investigate the impact of financial inclusion on the enhancement of paddy farmers’ technical efficiency (TE). The impact was evaluated rigorously from different dimensions which could be useful in the policy discussion for enhancing efficiency in utilizing productive resources. Design/methodology/approach - A cross-sectional data of randomly selected 120 paddy farmers from Khulna district in the Southwest region of Bangladesh were collected for this study. Initially, a stochastic production frontier approach was used for estimating farmers’ TE. Thereafter, ordinary least squares and quantile regression models were applied for unveiling the existing relationship between TE and various dimensions of financial inclusion after controlling all other socio-economic characteristics. Findings - The study findings revealed that farmers were around 86 percent technically efficient and amongst them, credit takers were more efficient than non-credit takers. A non-monotonic relationship between TE and amount of credit was observed where TE was maximized at amount around 20,000 Bangladeshi Taka (USD255), a medium credit in terms of its amount. In addition, credit literacy was identified as a significant factor for improving TE. Though difference in the choice of sources for accessing credit had little impact on mean TE, its effect was found significantly higher for low scored technically efficient farmers compared to high scored farmers. Practical implications - The policy toward widening the coverage of financial inclusion would be more effective than providing larger amount of credit to a limited number of farmers for improving their TE. Originality/value - Such an in-depth assessment of the impact of financial inclusion on TE is probably the first effort in the Khulna district of Bangladesh.

Suggested Citation

  • Sonia Afrin & Mohammed Ziaul Haider & Md. Sariful Islam, 2017. "Impact of financial inclusion on technical efficiency of paddy farmers in Bangladesh," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 77(4), pages 484-505, November.
  • Handle: RePEc:eme:afrpps:afr-06-2016-0058
    DOI: 10.1108/AFR-06-2016-0058
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    Citations

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    Cited by:

    1. Qi Zhou & Xiangfeng Chen & Shuting Li, 2018. "Innovative Financial Approach for Agricultural Sustainability: A Case Study of Alibaba," Sustainability, MDPI, vol. 10(3), pages 1-20, March.
    2. Abbas Ali Chandio & Yuansheng Jiang & Abdul Rauf & Fayyaz Ahmad & Waqas Amin & Khurram Shehzad, 2020. "Assessment of Formal Credit and Climate Change Impact on Agricultural Production in Pakistan: A Time Series ARDL Modeling Approach," Sustainability, MDPI, vol. 12(13), pages 1-21, June.
    3. Thanh Ngo & Hung V. Vu & Huong Ho & Thuy T. T. Dao & Hai T. H. Nguyen, 2019. "Performance of Fish Farms in Vietnam–Does Financial Access Help Improve Their Cost Efficiency?," IJFS, MDPI, vol. 7(3), pages 1-10, August.
    4. Bairagi, Subir K. & Mishra, Ashok K., 2020. "Do Farmers’ Organizations Impact Production Efficiency? Evidence from Bangladeshi Rice Farmers," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304179, Agricultural and Applied Economics Association.
    5. Angela Hilmi, 2019. "The Alfredo Namitete Agroecology Credit System: A New Business Model That Supports Small-Scale Lending," Sustainability, MDPI, vol. 11(15), pages 1-20, July.
    6. Chandio, Abbas Ali & Jiang, Yuansheng & Ahmad, Fayyaz & Adhikari, Salina & Ain, Qurat Ul, 2021. "Assessing the impacts of climatic and technological factors on rice production: Empirical evidence from Nepal," Technology in Society, Elsevier, vol. 66(C).
    7. Martinson Ankrah Twumasi & Hongyun Zheng & Love Offeibea Asiedu-Ayeh & Anthony Siaw & Yuansheng Jiang, 2023. "Access to Financial Services and Its Impact on Household Income: Evidence from Rural Ghana," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 35(4), pages 869-890, August.
    8. Abbas Ali Chandio & Yuansheng Jiang & Abdul Rehman & Waqar Akram, 2021. "Does Formal Credit Enhance Sugarcane Productivity? A Farm-Level Study of Sindh, Pakistan," SAGE Open, , vol. 11(1), pages 21582440209, January.
    9. Abbas Ali Chandio & Yuansheng Jiang & Waqar Akram & Ilhan Ozturk & Abdul Rauf & Aamir Ali Mirani & Huaquan Zhang, 2023. "The impact of R&D investment on grain crops production in China: Analysing the role of agricultural credit and CO2 emissions," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(4), pages 4120-4138, October.

    More about this item

    Keywords

    Quantile regression; Technical efficiency; Financial inclusion; Khulna district; Paddy farmers; Q11; Q14;
    All these keywords.

    JEL classification:

    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance

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