Increasing rice productivity in Ghana: Do savings with rural and community banks matter?

Enoch Yao Vukey, Irene S. Egyir, Edward Asiedu and Nana Afranaa Kwapong

Agricultural Finance Review, 2021, vol. 82, issue 4, 597-615

Abstract: Purpose - This paper analysed the motives behind farmers' savings with Rural and Community Banks (RCBs) and the effect of these savings on rice yield in the Hohoe Municipality of the Volta region of Ghana. Design/methodology/approach - A multi-stage sampling approach was used to draw a random sample of 222 rice farmers, and a structured questionnaire was employed to collect cross-sectional data. A Likert scale was used to rank the motive behind farmers' savings while the endogenous switching regression model was used to estimate the effect of savings on rice yield. Findings - The results of the study showed that most farmers mobilise savings to enhance farm investment which is critical to increasing rice productivity. Improved labour and fertiliser use had a positive influence on rice yield, while farm size had an inverse relation with rice yield. Further, the findings show that savings with RCBs help mobilise the necessary finance to enhance rice productivity. In terms of the treatment effect of savings, the results indicate that farmers who patronise saving products of RCBs recorded a statistically significant average yield of 1.41 Mt/ha more than those not patronising saving products from any bank. Practical implications - While the literature on agricultural finance focuses largely on credit, this study demonstrates that savings hold significant benefits for the development of agriculture through productivity gains. The importance of this demonstration is further shown by the fact that credit access depends on the ability to save in most developing countries. Social implications - There is a need to educate farmers about the essence of patronising formal savings products. Originality/value - This study represents the first attempt at linking farmers' savings to agricultural productivity using an econometric methodology in Ghana. The study serves as a foundation paper and for that matter will serve as a guide to future research on savings mobilisation and agricultural productivity nexus.

Keywords: Saving; Rural and community banks (RCBs); Rice farmers; Yields; Ghana (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eme:afrpps:afr-12-2020-0179

DOI: 10.1108/AFR-12-2020-0179

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