Fungibility of Smallholder Agricultural Credit: Empirical Evidence from Pakistan

Abid Hussain and Gopal Bahadur Thapa
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Abid Hussain: International Centre for Integrated Mountain Development (ICIMOD)
Gopal Bahadur Thapa: School of Environment, Resources and Development, Asian Institute of Technology

The European Journal of Development Research, 2016, vol. 28, issue 5, No 3, 826-846

Abstract: Abstract This study attempts to estimate credit fungibility (CF) and analyses its factors, using the primary data of 208 smallholders from Punjab province of Pakistan. Findings revealed that smallholders used a significant proportion of obtained credit on non-agricultural purposes. Among three groups of smallholders compared, that is, lower smallholders (⩽1.0 acre), middle smallholders (1.01–2.50 acres) and upper smallholders (2.51–5.00 acres), lower smallholders used nearly one-third of their obtained credit for non-agricultural purposes in spite of their highest dependency on credit to carry out their agricultural activities. In contrast, the other two groups of smallholders, whose dependency on credit was relatively low, had used a comparatively lower proportion of the credit for non-agricultural activities. The study also found that non-fixed assets and landholding size are the key factors of CF. Other factors such as non-farm income, household size, repayments of old loans, illiteracy and credit source also affected CF significantly, but with notable variations across the groups.

Keywords: credit fungibility; smallholders; agricultural credit; food security; Pakistan (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (8)

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DOI: 10.1057/ejdr.2015.55

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