Agricultural Credit and Extension Services: Does Their Synergy Augment Farmers’ Economic Outcomes?

Masaood Moahid, Ghulam Dastgir Khan, Yuichiro Yoshida, Niraj Joshi and Keshav Maharjan
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Masaood Moahid: Graduate School for International Development and Cooperation, Hiroshima University, Higashihiroshima, Hiroshima 739-8529, Japan
Ghulam Dastgir Khan: Graduate School for International Development and Cooperation, Hiroshima University, Higashihiroshima, Hiroshima 739-8529, Japan

Sustainability, 2021, vol. 13, issue 7, 1-23

Abstract: Access to credit is essential for sustainable agricultural development. This paper evaluates the impact of formal and informal agricultural credit, access to extension services, and different combinations of agricultural credit and extension services on the economic outcomes of farming households in Afghanistan. This study applies a quasi-experimental approach (propensity score matching) and inverse-probability-weighted regression adjustment (IPWRA) analysis. The data comes from a survey of 277 randomly selected farming households in the three districts of rural Afghanistan. The results show that having access to formal agricultural credit has a positive and differentiated impact on the farming costs and net revenue of farming households. However, the effects increase when a farming household has access to both formal credit and extension services. The results also reveal that credit constraints affect farming costs and net revenue. The study provides some practical implications for agricultural development policymakers. First, formal agricultural credit affects farm revenue in rural Afghanistan. Second, the impact of credit bundled with agricultural extension services on farm revenue is higher than the impact of the provision of each service separately. Therefore, a more sustainable agricultural credit arrangement should be supplemented by extension services for farmers in Afghanistan.

Keywords: formal agricultural credit; informal agricultural credit; PSM; IPWRA; net revenue; Afghanistan (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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