IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/112791.html
   My bibliography  Save this paper

Accessibility of Institutional Credit among the Agricultural Labour Households and its Impact on their Livelihood

Author

Listed:
  • Kundu, Amit
  • DAS, SANGITA

Abstract

Despite the major structural changes in the Indian credit system, landless and near landless agricultural labour households are still facing difficulties while accessing formal credit services. The paper tries to examine the possible factors influencing the accessibility of institutional credit by agricultural labour households and its role in their livelihood. Based on a village-level field investigation in the district of East Medinipur, West Bengal, the study shows that the Possession of operational land, membership of SHG, diversified farm and non-farm income, and higher financial literacy index are the significant determinants to increase the possibility of receiving institutional credit for these households. Using the two-stage least square method, the paper further reveals that the monthly per capita income of the agricultural labour households can increase if they use institutional and non-institutional sources of loans in income-generating activities. The study also suggests that the lower the age of the household head and the less dependency on the informal credits for consumption purposes of the households, the higher the possibility of improving the livelihood of the agricultural labour households.

Suggested Citation

  • Kundu, Amit & DAS, SANGITA, 2021. "Accessibility of Institutional Credit among the Agricultural Labour Households and its Impact on their Livelihood," MPRA Paper 112791, University Library of Munich, Germany, revised 03 Mar 2022.
    • Handle: RePEc:pra:mprapa:112791
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/112791/1/MPRA_paper_112791.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Kumar, Anjani & Mishra, Ashok K. & Saroj, Sunil & Joshi, P.K., 2017. "Institutional versus non-institutional credit to agricultural households in India: Evidence on impact from a national farmers’ survey," Economic Systems, Elsevier, vol. 41(3), pages 420-432.
    2. Sunil Kumar & Renuka Mahadevan, 2008. "Construction of An Adult Equivalence Index to Measure Intra-household Inequality and Poverty: Case Study," Discussion Papers Series 363, School of Economics, University of Queensland, Australia.
    3. Abhijit V. Banerjee & Paul J. Gertler & Maitreesh Ghatak, 2002. "Empowerment and Efficiency: Tenancy Reform in West Bengal," Journal of Political Economy, University of Chicago Press, vol. 110(2), pages 239-280, April.
    4. Townsend, Robert M, 1994. "Risk and Insurance in Village India," Econometrica, Econometric Society, vol. 62(3), pages 539-591, May.
    5. Agarwalla, Sobhesh Kumar & Barua, Samir K. & Jacob, Joshy & Varma, Jayanth R., 2015. "Financial Literacy among Working Young in Urban India," World Development, Elsevier, vol. 67(C), pages 101-109.
    6. Manojit Bhattacharjee & Meenakshi Rajeev & B.P. Vani, 2009. "Asymmetry in Information and Varying Rates of Interest," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 3(4), pages 339-364, October.
    7. Khandker, Shahidur R. & Faruqee, Rashid R., 2003. "The impact of farm credit in Pakistan," Agricultural Economics, Blackwell, vol. 28(3), pages 197-213, May.
    8. Adele Atkinson & Flore-Anne Messy, 2012. "Measuring Financial Literacy: Results of the OECD / International Network on Financial Education (INFE) Pilot Study," OECD Working Papers on Finance, Insurance and Private Pensions 15, OECD Publishing.
    9. John M. Antle & Prabhu L. Pingali, 1994. "Pesticides, Productivity, and Farmer Health: A Philippine Case Study," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(3), pages 418-430.
    10. Swamy, Vighneswara, 2014. "Financial Inclusion, Gender Dimension, and Economic Impact on Poor Households," World Development, Elsevier, vol. 56(C), pages 1-15.
    11. Frederic S. Mishkin, 2008. "The importance of economic education and financial literacy: a speech at the Third National Summit on Economic and Financial Literacy, Washington, D.C., February 27, 2008," Speech 368, Board of Governors of the Federal Reserve System (U.S.).
    12. Kumar, Anjani & Singh, Dhiraj K. & Kumar, Prabhat, 2007. "Performance of Rural Credit and Factors Affecting the Choice of Credit Sources," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 62(3), pages 1-17.
    13. Sudipta Bhattacharyya, 2005. "Interest rates, collateral and (de-)interlinkage: a micro-study of rural credit in West Bengal," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 29(3), pages 439-462, May.
    14. Nisha Bharti, 2018. "Evolution of agriculture finance in India: a historical perspective," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 78(3), pages 376-392, May.
    15. Kumar, Anjani & Mishra, Ashok K. & Saroj, Sunil & Joshi, Pramod Kumar, 2017. "Institutional versus noninstitutional credit to agricultural households in India: Evidence on impact from a national farmers’ survey," IFPRI discussion papers 1614, International Food Policy Research Institute (IFPRI).
    16. Dipasha Sharma, 2016. "Nexus between financial inclusion and economic growth," Journal of Financial Economic Policy, Emerald Group Publishing Limited, vol. 8(1), pages 13-36, April.
    17. Kumar, Anjani & Singh, K.M. & Sinha, Shradhajali, 2010. "Institutional Credit to Agriculture Sector in India: Status, Performance and Determinants," Agricultural Economics Research Review, Agricultural Economics Research Association (India), vol. 23(2), July.
    18. S. Chandrasekhar, 2014. "Reading the tea leaves on financial inclusion: The Case of rural labour households," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2014-003, Indira Gandhi Institute of Development Research, Mumbai, India.
    19. Recep YORULMAZ, 2013. "Construction of a Regional Financial Inclusion Index in Turkey," Journal of BRSA Banking and Financial Markets, Banking Regulation and Supervision Agency, vol. 7(1), pages 79-101.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Paramasivam Ramasamy & Umanath Malaiarasan, 2023. "Agricultural credit in India: determinants and effects," Indian Economic Review, Springer, vol. 58(1), pages 169-195, June.
    2. Kumar, Anjani & Mishra, Ashok K. & Saroj, Sunil & Joshi, P.K., 2017. "Institutional versus non-institutional credit to agricultural households in India: Evidence on impact from a national farmers’ survey," Economic Systems, Elsevier, vol. 41(3), pages 420-432.
    3. Birthal, Pratap S. & Hazrana, Jaweriah & Roy, Devesh & Satyasai, K. J. S, 2024. "Can Finance Mitigate Climate Risks in Agriculture? Farm-level Evidence from India," Policy Papers 344992, ICAR National Institute of Agricultural Economics and Policy Research (NIAP).
    4. Claude Bernard Lontchi & Baochen Yang & Yunpeng Su, 2022. "The Mediating Effect of Financial Literacy and the Moderating Role of Social Capital in the Relationship between Financial Inclusion and Sustainable Development in Cameroon," Sustainability, MDPI, vol. 14(22), pages 1-24, November.
    5. Mariapia MENDOLA, 2005. "Farm households production theories: a review of institutional and behavioural responses," Departmental Working Papers 2005-01, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    6. Rajat Deb & Kanchan Kumar Nath & Mukesh Nepal & Sourav Chakraborty & Kiran Sankar Chakraborty, 2021. "Do People Choose Life Insurance for Protection or for Saving?," Metamorphosis: A Journal of Management Research, , vol. 20(1), pages 35-44, June.
    7. Mário Antão, 2022. "Financial Literacy as a Strategic issue: A survey from Portuguese Higher Education Students ," GATR Journals jber227, Global Academy of Training and Research (GATR) Enterprise.
    8. Tarika Sikarwar & Anivesh Goyal & Harshita Mathur, 2020. "Household Debt, Financial Inclusion, and Economic Growth of India: Is it Alarming for India?," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 10(3), pages 229-248, February.
    9. Zhao, Yang & Goodell, John W. & Dong, Qingli & Wang, Yong & Abedin, Mohammad Zoynul, 2022. "Overcoming spatial stratification of fintech inclusion: Inferences from across Chinese provinces to guide policy makers," International Review of Financial Analysis, Elsevier, vol. 84(C).
    10. Mishra, Aswini Kumar & Bhardwaj, Vedant, 2022. "Financial access and household’s borrowing: Policy perspectives of an emerging economy," Journal of Policy Modeling, Elsevier, vol. 44(5), pages 981-999.
    11. Happiness Ozioma Obi-Anike & Ogohi Cross Daniel & Ifeoma Joanes Onodugo & Ikechukwu Joseph Attamah & Benedict Ogbemudia Imhanrenialena, 2023. "The Role of Financial Information Literacy in Strategic Decision-Making Effectiveness and Sustainable Performance among Agribusiness Entrepreneurs in Nigeria," Sustainability, MDPI, vol. 15(13), pages 1-17, July.
    12. Anita Mukherjee & Shawn Cole & Jeremy Tobacman, 2021. "Targeting weather insurance markets," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 88(3), pages 757-784, September.
    13. Chaoran Chen & Diego Restuccia & Raul Santaeulalia-Llopis, 2022. "The Effects of Land Markets on Resource Allocation and Agricultural Productivity," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 45, pages 41-54, July.
    14. Yusuf Ibrahim Kofarmata & Shri Dewi Applanaidu & Sallahuddin Hassan, 2016. "Determinants of Demand for Credit: A Conceptual Review," Asian Journal of Economics and Empirical Research, Asian Online Journal Publishing Group, vol. 3(1), pages 6-10.
    15. Pietrobon, Davide, 2024. "The dual role of insurance in input use: Mitigating risk versus curtailing incentives," Journal of Development Economics, Elsevier, vol. 166(C).
    16. Steve Agnew & Patrick Roger & Tristan Roger, 2024. "Adolescent Financial Literacy: Viewing Peers as Good Financial Role Models," Working Papers in Economics 24/14, University of Canterbury, Department of Economics and Finance.
    17. Agarwalla, Sobhesh Kumar & Barua, Samir K. & Jacob, Joshy & Varma, Jayanth R., 2015. "Financial Literacy among Working Young in Urban India," World Development, Elsevier, vol. 67(C), pages 101-109.
    18. Jisha, K K & Palakkeel, Prashobhan, 2023. "Availability of agricultural credit: determinants, marginal effect, and predicted probability," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 9(4), December.
    19. Anjani Kumar & Vinay K. Sonkar & K. S. Aditya, 2023. "Assessing the Impact of Lending Through Kisan Credit Cards in Rural India: Evidence from Eastern India," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 35(3), pages 602-622, June.
    20. Ojo, Temitope & Adetoro, Adetoso A. & Ogundeji, Abiodun A. & Belle, Johannes A., 2021. "Quantifying the Determinants of Climate Change Adaptation Strategies and Farmers’ Access to Credit in South Africa," 2021 Conference, August 17-31, 2021, Virtual 315853, International Association of Agricultural Economists.

    More about this item

    Keywords

    Agricultural labour households; Institutional credit; Probit regression; Instrumental variable; Livelihood;
    All these keywords.

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • J43 - Labor and Demographic Economics - - Particular Labor Markets - - - Agricultural Labor Markets
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

    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:pra:mprapa:112791. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.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.