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    The impact of credit on the technical efficiency of maize-producing households in northern Ghana

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    S19ArtMarteyImpactInthomDev.pdf (308.2Kb)
    Date
    2019-05
    Author
    Martey, E.
    Wiredu, A.
    Etwire, Prince Maxwell
    Kuwornu, J.K.M.
    Type
    Journal Article
    Target Audience
    Scientists
    Metadata
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    Abstract/Description
    Purpose Production credit is essential for enhancing the technical efficiency (TE) and the welfare of smallholder farmers in Africa. The purpose of this paper is to examine the impact of credit on smallholders’ TE using cross-sectional data from 223 maize-producing households in Northern Ghana. Design/methodology/approach Due to the exogenous assignment of credit and assumption of homogeneity in farm technologies, the propensity score matching (PSM) analysis was used to compare the average difference in TE between farmers that had received credit and those that had not. Findings The results revealed that production credit impacts positively on smallholder farmers’ TE. Access to production credit is significantly influenced by access to markets and extension services, distance to market, asset index and land fragmentation. The provision of credit enhances the timely purchase and efficient allocation of farming inputs to produce the maximum possible output. Per capita income and land fragmentation also play important roles in reducing smallholders’ TE. Practical implications To increase efficiency gains, credit programs for agricultural interventions should target resource-poor smallholder farmers. The efficiency gains can be sustained through stronger partnerships with financial institutions. Policy interventions aimed at increasing smallholder farmers’ access to production credit (e.g. through the creation of a conducive investment environment that lowers the lending rate and collateral requirements) must be vigorously pursued. Originality/value To the best of authors’ knowledge, this is one of the only recent studies to examine the impact of credit on the TE of farming households by applying the translog stochastic frontier production function and the PSM approaches.
    https://dx.doi.org/10.1108/AFR-05-2018-0041
    Multi standard citation
    Permanent link to this item
    https://hdl.handle.net/20.500.12478/5841
    Non-IITA Authors ORCID
    Alexander Nimo Wireduhttps://orcid.org/0000-0002-8487-4340
    Digital Object Identifier (DOI)
    https://dx.doi.org/10.1108/AFR-05-2018-0041
    IITA Subjects
    Agribusiness; Impact Assessment; Smallholder Farmers
    Agrovoc Terms
    Agriculture; Credit; Technical Aid; Efficiency; Smallholders; Farmers; Impact Assessment
    Regions
    Africa; West Africa
    Countries
    Ghana
    Journals
    Agricultural Finance Review
    Collections
    • Journal and Journal Articles4835
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