The effects of access to credit on productivity: separating technological changes from changes in technical efficiency

Nusrat Jimi (), Plamen Nikolov, Mohammad Malek and Subal Kumbhakar

Journal of Productivity Analysis, 2019, vol. 52, issue 1, No 3, 37-55

Abstract: Abstract Improving productivity among farm enterprises is important, especially in low-income countries where market imperfections are pervasive and resources are scarce. Relaxing credit constraints can increase the productivity of farmers. Using a field experiment involving in Bangladesh, we estimated the impact of access to credit on the overall productivity of rice farmers, and disentangled the total effect into technological change (frontier shift) and technical efficiency changes. We found that relative to the baseline rice output per decimal, access to credit resulted in, on average, approximately a 14 percent increase in yield, holding all other inputs constant. After decomposing the total effect into the frontier shift and efficiency improvement, we found that, on average, around 11 percent of the increase in output came from changes in technology, or frontier shift, while the remaining 3 percent was attributed to improvements in technical efficiency. The efficiency gain was higher for modern hybrid rice varieties, and almost zero for traditional rice varieties. Within the treatment group, the effect was greater among pure tenant and mixed-tenant farm households compared with farmers that only cultivated their own land.

Keywords: Field experiment; Microfinance; Credit; Efficiency; Productivity; Farmers (search for similar items in EconPapers)
JEL-codes: D2 E22 G21 G31 H81 I38 L25 O12 O16 Q12 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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Working Paper: The Effects of Access to Credit on Productivity: Separating Technological Changes from Changes in Technical Efficiency (2019)
Working Paper: The Effects of Access to Credit on Productivity: Separating Technological Changes from Changes in Technical Efficiency (2019)
Working Paper: The Effects of Access to Credit on Productivity: Separating Technological Changes from Changes in Technical Efficiency (2019)
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DOI: 10.1007/s11123-019-00555-8

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