Factors Affecting Farmers’ Access to Formal and Informal Credit: Evidence from Rural Afghanistan | Land Portal

Informações sobre recurso

Date of publication: 
Janeiro 2020
Resource Language: 
ISBN / Resource ID: 
LP-midp000336
Copyright details: 
© 2020 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article

Adequate access to credit is necessary for the sustainable development of agriculture. This study uses a double hurdle model to investigate what affects farming households’ credit participation and amount, and a Probit model to find out credit constraints. For this purpose, the data from a survey of 292 farming households in Afghanistan was utilized. The study finds that households obtain credit for their agricultural activities from various formal and informal sources. The results of the double hurdle model reveal that the financial activities of the households were positively determined by crop diversity, education, number of adults in a household, size of land, and access to extension. Non-agricultural income decreases the likelihood of participation. The results of the analysis of credit constraints indicate that formal credit did not help small-scale and remoter farming households; however, these households relied on informal credit, especially when they faced income shock. Furthermore, religious belief increased the chances of avoiding formal credit but not informal credit. It is suggested that formal credit should be expanded to rural areas, especially to small-scale farming households. Policy makers should also consider increasing access to extension. Formal financial institutions should provide Sharia-compliant credit, which increases the confidence level of households in using formal credit in Afghanistan.

Autores e editores

Author(s), editor(s), contributor(s): 

Moahid, MasaoodMaharjan, Keshav L.

Corporate Author(s): 
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    Provedor de dados

    MDPI AG, a publisher of open-access scientific journals, was spun off from the Molecular Diversity Preservation International organization. It was formally registered by Shu-Kun Lin and Dietrich Rordorf in May 2010 in Basel, Switzerland, and maintains editorial offices in China, Spain and Serbia. MDPI relies primarily on article processing charges to cover the costs of editorial quality control and production of articles. Over 280 universities and institutes have joined the MDPI Institutional Open Access Program; authors from these organizations pay reduced article processing charges.

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