Increasing access to formal agricultural credit: the role of rural producer organisations

Allison L. Benson and Jean-Paul Faguet

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Access to agricultural credit contributes to rural development by allowing farmers to carry out profit-maximising investments that increase productivity and income, underlining the importance of exploring ways to increase access to this resource. This paper analyses the role of Rural Producer Organisations (RPOs) in easing access to formal agricultural credit. We build an original dataset comprising 15,000 municipality-year observations of RPO creation and credit allocation in Colombia to estimate a fixed effects model. We show that when the number of RPOs increases in a municipality, aggregate access to credit increases. This positive relation also holds at the individual level, with RPO membership increasing both the likelihood of a farmer requesting credit and of receiving the requested credit. We discuss demand and supply-side mechanisms that plausibly explain these results, and we further show that the relation between RPOs and access to credit is heterogeneous according to the source of credit (public vs. private bank) and the type of farmer to whom it is allocated (low-wealth, mid-wealth or high-wealth farmers). Our results point to the potential of RPOs to improve access not only to input and output markets but also to financial markets.

Keywords: agricultural credit; credit constraints; rural producer organizations; Colombi (search for similar items in EconPapers)
JEL-codes: J01 R14 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2023-01-02
New Economics Papers: this item is included in nep-agr
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published in The Journal of Development Studies, 2, January, 2023, 59(1), pp. 21 - 38. ISSN: 0022-0388

Downloads: (external link)
http://eprints.lse.ac.uk/115546/ Open access version. (application/pdf)

Related works:
Journal Article: Increasing Access to Formal Agricultural Credit: The Role of Rural Producer Organisations (2023)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:115546

Access Statistics for this paper

More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager ().