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

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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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    Cited by:

    1. Dorosh, Paul A. & Shahabuddin, Quazi, 2002. "Rice price stabilization in Bangladesh: an analysis of policy options," MSSD discussion papers 46, International Food Policy Research Institute (IFPRI).
    2. Nicholas Minot & Lisa Daniels, 2005. "Impact of global cotton markets on rural poverty in Benin," Agricultural Economics, International Association of Agricultural Economists, vol. 33(s3), pages 453-466, November.
    3. Shahabuddin, Quazi & Dorosh, Paul A., 2002. "Comparative advantage in Bangladesh crop production," MTID discussion papers 47, International Food Policy Research Institute (IFPRI).
    4. 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.
    5. 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.
    6. Bidisha, Sayema Haque & Khan, Akib & Khondker, Bazlul Haque & Imran, Khalid, 2015. "Returns to Agricultural Microcredit: Quasi-experimental Evidence from Bangladesh," Bangladesh Development Studies, Bangladesh Institute of Development Studies (BIDS), vol. 38(4), pages 31-46, December.
    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.
    8. Bidisha, Sayema Haque & Hossain, Md. Amzad & Alam, Rubaiyat & Hasan, Md. Mehedi, 2018. "Credit, tenancy choice and agricultural efficiency: Evidence from the northern region of Bangladesh," Economic Analysis and Policy, Elsevier, vol. 57(C), pages 22-32.
    9. Delgado, Christopher L. & Rosegrant, Mark W. & Wada, Nikolas & Meijer, Siet & Ahmed, Mahfuzuddin, 2002. "Fish as food," MTID discussion papers 52, International Food Policy Research Institute (IFPRI).
    10. 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.
    11. 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.
    12. 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.
    13. Gulati, Ashok & Narayanan, Sudha, 2002. "Rice trade liberalization and poverty," MTID discussion papers 51, International Food Policy Research Institute (IFPRI).
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    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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