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Micro-Lending for small farmers in bangladesh: Does it affect farm households' land allocation decision?

Author

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  • Rashid, Shahidur
  • Sharma, Manohar P
  • Zeller, Manfred

    (International Food Policy Research Institute,USA
    University of Gottingen,Germany)

Abstract

Despite higher profitability of High Yielding Varieties (HYVs), it has long been hypothesized that lack of access to credit is one of the main reasons, why farmers in developing countries continue to allocate a portion of their land to traditional crop varieties. The empirical testing of this hypothesis has generated a large body of literature with differing conclusions. This paper re-examines the issue in the context of a specially designed group based lending programs for small farmers in Bangladesh, who neither have access to formal sources of credit nor do they qualify to become members of other micro-credit organizations. Two measures of access to credit, credit limit and amount borrowed at a given point in time, have been used to analyze the determinants of farm households' land allocation decision. Under a variety of model specifications, formulated within Heckman's two-step method, the results show that credit limits from the lending programs and informal sources are significant determinants of small farmers' decision to cultivate HYV.

Suggested Citation

  • Rashid, Shahidur & Sharma, Manohar P & Zeller, Manfred, 2004. "Micro-Lending for small farmers in bangladesh: Does it affect farm households' land allocation decision?," Journal of Developing Areas, Tennessee State University, College of Business, vol. 37(2), pages 13-29, January-M.
    • Handle: RePEc:jda:journl:vol.37:year:2004:issue2:pp:13-29
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    Citations

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    Cited by:

    1. Shah Johir Rayhan & Md. Sadique Rahman & Kaiyu Lyu, 2024. "Increasing Boro rice productivity through credit: Evidence from Bangladesh," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 70(2), pages 49-59.
    2. Shah Johir Rayhan & Md. Sadique Rahman & Kaiyu Lyu, 2023. "The Role of Rural Credit in Agricultural Technology Adoption: The Case of Boro Rice Farming in Bangladesh," Agriculture, MDPI, vol. 13(12), pages 1-17, November.
    3. Timothy N. Njeru & Yukichi Mano & Keijiro Otsuka, 2016. "Role of Access to Credit in Rice Production in Sub-Saharan Africa: The Case of Mwea Irrigation Scheme in Kenya," Journal of African Economies, Centre for the Study of African Economies, vol. 25(2), pages 300-321.
    4. Jiang Du & Miao Zeng & Zhengjuan Xie & Shikun Wang, 2019. "Power of Agricultural Credit in Farmland Abandonment: Evidence from Rural China," Land, MDPI, vol. 8(12), pages 1-14, December.
    5. Bidisha, Sayema Haque & Khan, Akib & Imran, Khalid & Khondker, Bazlul H. & Suhrawardy, Gazi Mohammad, 2017. "Role of credit in food security and dietary diversity in Bangladesh," Economic Analysis and Policy, Elsevier, vol. 53(C), pages 33-45.
    6. John-Philippe Essiagnon Alavo & Emefa Adzowa-Sika Cogbe & Xiangmei Li & Gershom Mwalupaso Endelani & Ekram Abdalgadir Eltom & Mariko Korotoumou & Aseres Mamo Ethetie, 2024. "Evaluation of the Effect of Farmer Input Support Program (FISP) on Small-Scale Farmers in the Kara Region of Togo," Journal of Agricultural Science, Canadian Center of Science and Education, vol. 11(4), pages 1-35, April.
    7. Porgo, Mohamed & Kuwornu, John K.M. & Zahonogo, Pam & Jatoe, John Baptist D. & Egyir, Irene S., 2018. "Credit constraints and cropland allocation decisions in rural Burkina Faso," Land Use Policy, Elsevier, vol. 70(C), pages 666-674.

    More about this item

    Keywords

    Micro-credit Programs; Access to Credit; Credit Limit; Land Allocation Decision; Selection Bias; Bangladesh;
    All these keywords.

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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