Agricultural credit constraints in smallholder farming in developing countries: Evidence from Nigeria
The agricultural sector in developing countries like Nigeria is characterized by low productivity, driven partly by low use of modern agricultural technologies. Poor access to credit is seen as a key barrier to adoption of these technologies. Policy discourses and literature often associate credit c...
| Main Authors: | , |
|---|---|
| Format: | Journal Article |
| Language: | Inglés |
| Published: |
Elsevier
2022
|
| Subjects: | |
| Online Access: | https://hdl.handle.net/10568/141225 |
| _version_ | 1855528061959667712 |
|---|---|
| author | Balana, Bedru Oyeyemi, Motunrayo Ayowumi |
| author_browse | Balana, Bedru Oyeyemi, Motunrayo Ayowumi |
| author_facet | Balana, Bedru Oyeyemi, Motunrayo Ayowumi |
| author_sort | Balana, Bedru |
| collection | Repository of Agricultural Research Outputs (CGSpace) |
| description | The agricultural sector in developing countries like Nigeria is characterized by low productivity, driven partly by low use of modern agricultural technologies. Poor access to credit is seen as a key barrier to adoption of these technologies. Policy discourses and literature often associate credit constraints by smallholders with supply-side factors such as inadequate access to sources of rural finance or high costs of borrowing. However, demand-side factors, such as smallholders’ risk-averse behavior, high transaction costs and information asymmetry predominate in rural areas of developing countries equally play important roles in the functioning of rural credit market. Using a nationally representative LSMS-ISA data from 5000 smallholders in Nigeria and seemingly unrelated econometric models, we examine the nature of rural credit, the factors affecting rural credit, and the effects of credit constraints on adoption of four agricultural technologies – inorganic fertilizer, improved seed, agrochemicals, and mechanization. Contrary to policy discourses focusing on supply-side factors of rural credit, we found that demand-side factors are equally important for improving access and utilization of rural credit. On the supply side, inadequate collateral is the key constraint; hence supply-side policies should focus on enhancing smallholders’ capacity to possess bankable collateral, such as land title or assets. On the demand-side, interventions such as crop insurance, information access and extension services are needed to increase credit access, technology adoption, and smallholder's agricultural productivity. |
| format | Journal Article |
| id | CGSpace141225 |
| institution | CGIAR Consortium |
| language | Inglés |
| publishDate | 2022 |
| publishDateRange | 2022 |
| publishDateSort | 2022 |
| publisher | Elsevier |
| publisherStr | Elsevier |
| record_format | dspace |
| spelling | CGSpace1412252025-10-26T13:01:40Z Agricultural credit constraints in smallholder farming in developing countries: Evidence from Nigeria Balana, Bedru Oyeyemi, Motunrayo Ayowumi rural finance technology capacity development agricultural credit smallholders developing countries credit credit control The agricultural sector in developing countries like Nigeria is characterized by low productivity, driven partly by low use of modern agricultural technologies. Poor access to credit is seen as a key barrier to adoption of these technologies. Policy discourses and literature often associate credit constraints by smallholders with supply-side factors such as inadequate access to sources of rural finance or high costs of borrowing. However, demand-side factors, such as smallholders’ risk-averse behavior, high transaction costs and information asymmetry predominate in rural areas of developing countries equally play important roles in the functioning of rural credit market. Using a nationally representative LSMS-ISA data from 5000 smallholders in Nigeria and seemingly unrelated econometric models, we examine the nature of rural credit, the factors affecting rural credit, and the effects of credit constraints on adoption of four agricultural technologies – inorganic fertilizer, improved seed, agrochemicals, and mechanization. Contrary to policy discourses focusing on supply-side factors of rural credit, we found that demand-side factors are equally important for improving access and utilization of rural credit. On the supply side, inadequate collateral is the key constraint; hence supply-side policies should focus on enhancing smallholders’ capacity to possess bankable collateral, such as land title or assets. On the demand-side, interventions such as crop insurance, information access and extension services are needed to increase credit access, technology adoption, and smallholder's agricultural productivity. 2022 2024-04-12T13:37:29Z 2024-04-12T13:37:29Z Journal Article https://hdl.handle.net/10568/141225 en https://doi.org/10.22004/ag.econ.315347 https://doi.org/10.2499/p15738coll2.134152 https://hdl.handle.net/10568/142531 Open Access Elsevier Balana, Bedru B.; and Oyeyemi, Motunrayo Ayowumi. 2022. Agricultural credit constraints in smallholder farming in developing countries: Evidence from Nigeria. World Development Sustainability 1(2022): 100012. https://doi.org/10.1016/j.wds.2022.100012 |
| spellingShingle | rural finance technology capacity development agricultural credit smallholders developing countries credit credit control Balana, Bedru Oyeyemi, Motunrayo Ayowumi Agricultural credit constraints in smallholder farming in developing countries: Evidence from Nigeria |
| title | Agricultural credit constraints in smallholder farming in developing countries: Evidence from Nigeria |
| title_full | Agricultural credit constraints in smallholder farming in developing countries: Evidence from Nigeria |
| title_fullStr | Agricultural credit constraints in smallholder farming in developing countries: Evidence from Nigeria |
| title_full_unstemmed | Agricultural credit constraints in smallholder farming in developing countries: Evidence from Nigeria |
| title_short | Agricultural credit constraints in smallholder farming in developing countries: Evidence from Nigeria |
| title_sort | agricultural credit constraints in smallholder farming in developing countries evidence from nigeria |
| topic | rural finance technology capacity development agricultural credit smallholders developing countries credit credit control |
| url | https://hdl.handle.net/10568/141225 |
| work_keys_str_mv | AT balanabedru agriculturalcreditconstraintsinsmallholderfarmingindevelopingcountriesevidencefromnigeria AT oyeyemimotunrayoayowumi agriculturalcreditconstraintsinsmallholderfarmingindevelopingcountriesevidencefromnigeria |