Decentralized Targeting of Agricultural Credit Programs: Private versus Political Intermediaries

Pushkar Maitra, Sandip Mitra (), Dilip Mookherjee and Sujata Visaria ()
Additional contact information
Sandip Mitra: Indian Statistical Institute
Sujata Visaria: Hong Kong University of Science and Technology
Authors registered in the RePEc Author Service: Sujata Visaria and Sujata Visaria

No 2021-19, Monash Economics Working Papers from Monash University, Department of Economics

Abstract: We conduct a field experiment in India comparing two approaches to appointing a local commission agent to select eligible smallholder farmers for a subsidized credit program: a private trader in TRAIL, versus a political appointee in GRAIL. Both schemes had similar loan take-up, repayments and similar treatment effects on borrowing and farm output, but farmers' profits increased significantly only in the TRAIL scheme. This is explained by a larger reduction in the unit costs of production. While there is evidence that the TRAIL agent selected farmers of higher productivity, differences in selection (on productivity or other relevant attributes) is unable to explain much of the observed differences in average treatment effects on farmer profits. We explain the larger treatment effects in TRAIL conditional on selection, as the result of the TRAIL agents' superior motivation and their capacity to offer treated farmers' business advice and lower their production costs.

Keywords: Targeting; Intermediation; Decentralization; Community Driven Development; Agricultural Credit (search for similar items in EconPapers)
JEL-codes: H42 I38 O13 O16 O17 (search for similar items in EconPapers)
Date: 2021-12
New Economics Papers: this item is included in nep-agr, nep-dev, nep-exp and nep-mfd
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Decentralized Targeting of Agricultural Credit Programs: Private Versus Political Intermediaries (2024)
Working Paper: Decentralized Targeting of Agricultural Credit Programs: Private versus Political Intermediaries (2021)
Working Paper: Decentralized Targeting of Agricultural Credit Programs: Private versus Political Intermediaries (2020)
Working Paper: Decentralized Targeting of Agricultural Credit Programs: Private versus Political Intermediaries (2020)
Working Paper: Decentralized Targeting of Agricultural Credit Programs: Private versus Political Intermediaries (2020)
Working Paper: Decentralized Targeting of Agricultural Credit Programs: Private versus Political Intermediaries (2020)
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