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Outline
Introduction
I.
I.
II.
Background
Motivation and objectives of the study
II. Methodology
I.
Model of farmers access to and demand for credit
II.
Credit constraints and farm productivity
III. Productivity loss due to credit constraints
III. Data and descriptive statistics
IV. Results
V.
I. Introduction
Background
Positive correlation between access to credit and
Poverty reduction
Transition from subsistence farming to agri-business
Acquisition of production inputs (short term) and realisation of
profitable investments (long term)
Background (2)
In Ethiopia, credit market imperfections are more acute in the
agricultural sector:
Motivation
How limited access to credit (or lack thereof) affects farm
productivity?
II.
Methodology
Methodology
Access to and demand for credit
Simultaneous estimation
= + Latent notional demand for credit
= ( + > 0) Observable demand for credit
= +
2 , ; + 1 [ 2 ( , ; )]
, ; =
=1
Methodology (2)
Credit constraints and farm productivity
= + +
1 > 0
=
0 0
Productivity equations
1 = 1 + 1 + 1 = 1
=
2 = 2 + 2 + 2 = 0
IV.
Why not?
Unconstrained
Price constrained
Transaction costs
constrained
Risk constrained
NON
Applied for a
loan in the past
12 months?
-Loan rejected
-Partially approved
NON
YES
Received total
amount applied
for?
YES
Unconstrained
Quantity
constrained
Descriptive statistics
Pooled sample
Number
2011-12
Unconstrained
1,771
Relative
frequency
33.36
Constrained
3,537
66.64
2,134
80.41
1,403
52.86
Quantity-constrained
264
7.46
145
6.79
119
8.48
Price-constrained
238
6.73
147
6.89
91
6.49
Risk-constrained
2,546
71.98
1,555
72.87
991
70.63
507
14.33
294
13.78
213
15.18
5,308
100
2,654
100
Transaction costs-constrained
Observations
Number
2013-14
Number
520
Relative
frequency
19.59
1,251
Relative
frequency
47.14
2,654
100
Credit
constrained
No
Yes
Household characteristics
Age of the head (in years)
45.66 (15.18)
1.70 (3.04)
20.43
Household size
Monthly consumption ( ETB)
Access to extension services (%)
5.28(2.23)
603.21
(1,808.46)
15.79 (36.47)
45.22
(14.31)
1.73 (2.97)
45.88
(15.59)
1.69 (3.07)
18.74
(39.03)
5.40 (2.21)
21.28(40.94)*
580.02
(1,371.43)
12.76
(33.38)
614.82
(1,991.66)
17.30
(37.83)***
5.22 (2.23)***
Farm characteristics
Crop output (in ETB)
Land size (in acres)
Land productivity (ETB/acre)
9,736.68
(81,854.51)
3.82 (17.38)
14,879.73
7,146.51
(139,201.5) (18,343.46)***
4.26 (13.25) 3.60 (19.11)
6,783.94
(63,496.29)
10,906.07
(106,647.5)
4,719.95
(18,575.11)**
Credit
constrained
No
Yes
1,089.86 (1,976.07)
1,147.31 (1,442.52)
1,061.09 (2,194.65)*
56.67 (390.57)
82.38 (614.04)
43.80 (199.28)***
8.97 (23.65)
10.17 (21.72)
8.37 (24.53)**
36.20 (43.58)
39.06 (43.38)
34.77 (43.62)***
54.95 (36.67)
58.27 (35.66)
53.29 (37.06)***
16.70 (19.81)
16.18 (17.93)
16.96 (20.68)
67.27 (48.97)
65.03 (46.53)
68.39 (50.12)**
37.57 (26.52)
37.53 (26.34)
37.60 (26.62)
23.81 (26.45)
22.50 (27.23)
24.46 (26.03)**
13.22 (19.01)
14.00 (18.77)
12.83 (19.12)**
8.74 (10.83)
8.83 (10.68)
8.70 (10.91)
V.
Results
Access
Demand
0.025 (0.014)** 0.035 (0.016)**
0.07 (0.019)*** 0.026 (0.006)***
0.458 (0.133)*** -0.157 (0.168)
-0.089 (0.090) 0.113 (0.112)
0.000 (0.003) -0.017 (0.003)
0.001 (0.000)
0.002 (0.002)
0.006 (0.010) -0.016 (0.013)
0.131 (0.076)* 0.005 (0.102)
2.497 (0.144)*** 2.203 (0.141)***
0.010 (0.005)*** -0.003 (0.007)
0.042 (0.053)
-0.007(0.025)
0.063 (0.163) -0.330 (0.245)
0.117 (0.278)
0.002 (0.005)
0.464 (0.163)***
0.008 (0.006)
-0.007 (0.007)
0.002 (0.001)
-0.00 (0.004)**
0.024 (0.015) 0.016 (0.009)*
-1.38 (0.238)*** 2.932 (2.617)
quantityconstrained
(Model II)
Priceconstrained
RiskConstrained
Transaction costsconstrained
(Model V)
(Model IV)
0.082(0.048)*
-0.018(0.010)*
0.000(0.000)**
-0.013 (0.006)**
-0.031(0.045)
-0.240 (0.349)
0.024 (0.129)
-0.106 (0.147)
0.003(0.070)
0.005(0.011)
-0.000(0.000)
-0.012(0.009)
-0.007 (0.033)
-0.099(0.258)
0.031(0.153)**
-0.061(0.134)
0.074(0.053)
-0.018(0.008)**
0.000 (0.000)**
-0.005 (0.006)
-0.005 (0.021)
-0.605(0.059)***
-0.252(0.128)**
-0.469 (0.120)***
0.078(0.206)
-0.001(0.014)
-0.000 (0.000)
-0.001(0.001)
-0.091 (0.049)*
-0.364 (0.060)***
-0.343(0.283)
-0.041 (0.223)
(Model III)
-0.172(0.097)*
0.018 (0.015)
-0.001 (0.000)
-0.005 (0.012)
0.043(0.031)
-0.095(0.013)***
0.205(0.281)
0.097 (0.253)
0.001(0.001)
0.001(0.001)
0.000(0.001)
0.002(0.001)*
0.002(0.001)**
0.181(0.051)***
-0.072 (0.081)
0.143(0.178)
0.069 (0.125)
-0.104(0.067)
0.001(0.001)
-0.001 (0.002)
0.000 (0.003)
0.003 (0.003)
0.005 (0.002)***
0.001(0.001)***
-0.001(0.001)
-0.262(0.117)**
0.573 (1.147)
0.000(0.002)
-0.001(0.004)
0.570(0.387)
-7.756(1.550)***
0.000(0.002)
-0.001(0.002)
0.347(0.298)
1.283 (1.774)
0.000(0.003)
-0.001(0.004)
-0.094 (0.062)
1.392 (1.259)
0.000(0.001)
0.003(0.001)**
0.084 (0.161)
-3.761(1.403)***
Constrained
-0.065(0.031)**
-0.367 (0.199)*
-0.595 (0.058)***
3.522 (0.425)***
0.984(0.048)***
0.238 (0.036)***
0.502 (0.142)***
0.709(0.194)***
0.435(0.113)***
0.363 (0.149)**
2.453 (0.445)***
1.430 (0.285)***
0.559 (0.004)***
-20.449 (2.716)***
Unconstrained
-0.037(0.034)
-0.582(0.214)***
-0.478 (0.065)***
3.062 (0.508)***
1.153(0.056)***
0.205(0.036)***
0.376(0.117)***
0.522(0.223)***
0.057 (0.111)
0.146(0.137)
1.828(0.492)***
2.011(0.458)***
1.167(0.005)***
-9.299 (3.518)***
Quantity-constrained
Percent
in the
sample
4.97
( | =
)
Price-constrained
4.48
Risk-constrained
47.97
Transaction costs-constrained
9.55
66.64
3,426.56
(6029.748)
3,446.119
(10,136.96)
4031
(12,149.11)
2,641.084
(10,603.38)
5,023.002
(12,975.38)
D= B-C
E=D/C
Relative
( | = ( | =
productivity
)
)
gain
2,983.058
443.502
14.9%
(3,847.658)
2,158.31
1,287.809
59.7%
(5,278.067)
2,882.7153 1,148.2847
39.83%
(1,529.69)
2,068.571
572.513
27.68%
(4780.54)
3,133.034
1,889.968
60.03%
(9,637.121)