Access to credit and heterogeneous effects on agricultural technology adoption: Evidence from large rural surveys in Ethiopia

Regassa, M D and Degnet, M B and Melesse, M B (2023) Access to credit and heterogeneous effects on agricultural technology adoption: Evidence from large rural surveys in Ethiopia. Canadian Journal of Agricultural Economics, 71. pp. 231-253. ISSN 1744-7976

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Abstract

Modern agricultural technologies hold huge potential for increasing productivity and reducing poverty in developing countries. However, adoption levels of these technologies have remained disappointingly low in Africa. This paper analyzes the effect of access to credit on the likelihood of adoption and use intensity of chemical fertilizers using data from large rural surveys in Ethiopia. Using a heteroscedasticity-based identification strategy to address the endogenous nature of access to credit, we find that access to credit has significant positive effects on adoption and intensity of use of chemical fertilizers. However, important heterogeneities are observed. Credit obtained from formal sources is more important for the intensity of use than for the decision to adopt chemical fertilizers. Credit taken with the primary purpose of financing agricultural inputs is more likely to promote adoption of chemical fertilizers than credit taken per se. Furthermore, reported credit effects are larger when estimated against the sample of credit-constrained non-users as compared with the pool of the whole sample of credit non-users. The results remain robust to several sensitivity analyses. Our results yield useful implications for the design, promotion, and targeting of credit services to leverage their effect on adoption of agricultural technologies.

Item Type:	Article
Divisions:	Research Program : East & Southern Africa
CRP:	UNSPECIFIED
Uncontrolled Keywords:	chemical fertilizers, credit access, Ethiopia, heterogeneity analysis, heteroscedasticity-based identification, technology adoption
Subjects:	Others > Rural Development Others > Statistics Others > Ethiopia
Depositing User:	Mr Nagaraju T
Date Deposited:	08 Nov 2023 10:04
Last Modified:	22 Feb 2024 10:38
URI:	http://oar.icrisat.org/id/eprint/12279
Official URL:	https://onlinelibrary.wiley.com/doi/epdf/10.1111/c...
Projects:	UNSPECIFIED
Funders:	UNSPECIFIED
Acknowledgement:	We thank the Central Statistical Agency (CSA) of Ethiopia and the International Food Policy Research Institute (IFPRI) for extending access to the data. We are also thankful to the editor and two anonymous reviewers for their constructive comments and suggestions that have improved the manuscript. All errors are the sole responsibility of the authors.
Links:	Google Scholar

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