Productivity Effect of Credit Access for Microenterprises: Separating Technical Change from Technical Efficiency Change

Citation:

Jimi N, Nikolov P, Malek M, Kumbhakar S. Productivity Effect of Credit Access for Microenterprises: Separating Technical Change from Technical Efficiency Change. Journal of Productivity Analysis. Forthcoming.

Abstract:

Productivity improvements among microenterprises are important, especially for low-income countries where market imperfections are pervasive and resources are scarce. Relaxing credit constraints can influence input choice of microenterprises and the efficiency of transforming inputs into output. Using a field experiment among agricultural microenterprises in Bangladesh, we estimate the impact of expanding credit access on productivity of rice farmers and disentangle the total effect into technological change (frontier shift) and efficiency change. We find that, relative to the baseline rice output per decimal, credit access resulted, on average, in approximately 13 percent increase in yield. The effect is doubled on modern hybrid rice and almost zero on traditional rice types. Approximately 9 percent of the output effect comes from change in technology and 3 percent increase in output is attributed to improvement in technical efficiency, on average. Within the treatment group, the effect is larger among pure tenant and mixed tenant microenterprise households than microenterprises who cultivate only their own lands.

Last updated on 04/30/2019