The Impact of Formal Agricultural Credit on Farm Productivity and Its Utilization in Khyber Pakhtunkhwa, Pakistan

Chitralada Chaiya (), Sikandar Sikandar, Pichate Pinthong, Shahab E. Saqib and Niaz Ali
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Chitralada Chaiya: College of Politics and Governance, Mahasarakham University, Kantharawichai District, Mahasarakham 44150, Thailand
Sikandar Sikandar: Directorate of Admissions, Abdul Wali Khan University, Mardan 23200, Pakistan
Pichate Pinthong: Graduate School of Public Administration, National Institute of Development Administration, Setithai Road, Bangkapi, Bangkok 10240, Thailand
Shahab E. Saqib: Directorate General of Commerce Education and Management Sciences, Higher Education Archives and Libraries Department, Government of Khyber Pakhtunkhwa, Peshawar 25000, Pakistan
Niaz Ali: Directorate General of Commerce Education and Management Sciences, Higher Education Archives and Libraries Department, Government of Khyber Pakhtunkhwa, Peshawar 25000, Pakistan

Sustainability, 2023, vol. 15, issue 2, 1-14

Abstract: Agricultural mechanization and the use of mixed inputs ensure higher productivity. In this regard, the Government of Pakistan has executed an approach for the provision of agricultural credit to smallholders for improving agricultural production. However, many issues are involved in the extent, utilization and impacts of credit. This study aims to explore the impact of credit, its utilization, misuse and factors determining the extent of agricultural credit in Pakistan. A semi-structured questionnaire was developed to collect data from 316 farmers in Mardan District. The study was analyzed through statistical tools such as a paired t -test, ANOVA and multiple regressions. Results showed that agricultural credit enhanced crops’ production. However, according to percentage use, misuse of the credit was more common than its proper utilization. Farmers utilized credit for land preparation, fertilizers, seeds, pesticides and daily labor. They misused agricultural credit for healthcare, education of children, domestic needs and business. Results of the regression model showed that farmers’ age, experience, farm size, farm income, farm labor and land ownership were determinants of the extent of agricultural credit. Policy measures should be taken to stop the misuse of agricultural credit to achieve the target set for agricultural productivity.

Keywords: agricultural credit; formal credit; sustainable agriculture; productivity; credit utilization; credit fungibility; Pakistan (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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