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Agricultural credit and technical efficiency in Ghana: is there a nexus?

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  • Abdul-Hanan Abdallah

Abstract

Purpose - – The purpose of this paper is to examine the impact of agricultural credit on technical efficiency of Ghanaian maize farmers using a unique dataset drawn from the database of Sub-Saharan Africa’s intensification of food crops agriculture (Afrint II) in 2008 period. Design/methodology/approach - – In this study, a two-stage estimation procedure is employed to determine impact of agricultural credit on technical efficiency of Ghanaian maize farmers. The first stage utilized probit model while the second stage utilized stochastic frontier approach to estimate impact of credit on technical efficiency of Ghanaian maize farmers. Findings - – The study found that farmers are producing below the frontier with average technical efficiency of 47 percent. Policy variables such as credit access; education, extension access and farm size played a stronger role in technical efficiency. Agricultural credit in particular increased technical efficiency by 3.8 percent. Research limitations/implications - – The results should not be extended to the impact of agricultural credit on economic efficiency since the allocative efficiency component is not considered in this study. Also, caution should be taken in the interpretation of these results because the data could not permit the incorporation of all variables that might affect technical efficiency. Originality/value - – The originality of the paper and its contribution to existing literature largely lies from the use of a unique dataset to find evidence of the impact of credit on efficiency in Ghana.

Suggested Citation

  • Abdul-Hanan Abdallah, 2016. "Agricultural credit and technical efficiency in Ghana: is there a nexus?," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 76(2), pages 309-324, July.
    • Handle: RePEc:eme:afrpps:v:76:y:2016:i:2:p:309-324
    DOI: 10.1108/AFR-01-2016-0002
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    Citations

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    Cited by:

    1. Kamaldeen Mohammed & Evans Batung & Moses Kansanga & Hanson Nyantakyi-Frimpong & Isaac Luginaah, 2021. "Livelihood diversification strategies and resilience to climate change in semi-arid northern Ghana," Climatic Change, Springer, vol. 164(3), pages 1-23, February.
    2. Ayat Ullah & Nasir Mahmood & Alam Zeb & Harald Kächele, 2020. "Factors Determining Farmers’ Access to and Sources of Credit: Evidence from the Rain-Fed Zone of Pakistan," Agriculture, MDPI, vol. 10(12), pages 1-13, November.
    3. Olexandr Yemelyanov & Tetyana Petrushka & Anastasiya Symak & Olena Trevoho & Anatolii Turylo & Oksana Kurylo & Lesia Danchak & Dmytro Symak & Lilia Lesyk, 2020. "Microcredits for Sustainable Development of Small Ukrainian Enterprises: Efficiency, Accessibility, and Government Contribution," Sustainability, MDPI, vol. 12(15), pages 1-32, July.
    4. Yusuf Tanko & Kang Cheah Yong & Rabiul Islam, 2020. "Economic Efficiency of Farm Size, Fertilizer, and Improve seeds on Rice Production in Kano State, Nigeria," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 6(2), pages 21-32, June.
    5. Jiang Du & Miao Zeng & Zhengjuan Xie & Shikun Wang, 2019. "Power of Agricultural Credit in Farmland Abandonment: Evidence from Rural China," Land, MDPI, vol. 8(12), pages 1-14, December.
    6. Dokyi Emmanuel & Anang Benjamin Tetteh & Owusu Victor, 2021. "Impacts of Improved Seed Maize Technology Adoption on Productivity and Technical Efficiency in Northern Ghana," Open Economics, De Gruyter, vol. 4(1), pages 118-132, January.
    7. Thi Lam Bui & Huu Cuong Tran & Hossein Azadi & Philippe Lebailly, 2018. "Improving the Technical Efficiency of Sengcu Rice Producers through Better Financial Management and Sustainable Farming Practices in Mountainous Areas of Vietnam," Sustainability, MDPI, vol. 10(7), pages 1-19, July.
    8. Abbas Ali Chandio & Yuansheng Jiang & Abdul Rehman & Waqar Akram, 2021. "Does Formal Credit Enhance Sugarcane Productivity? A Farm-Level Study of Sindh, Pakistan," SAGE Open, , vol. 11(1), pages 21582440209, January.
    9. Doku, James Ntiamoah & Dziwornu, Raymond K. & Agbanyo, Richard & Awuletey, Joyce Owusuaa, 2022. "Loan syndication and cocoa production: Evidence from Ghana," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 17(2), June.
    10. de Souza Filho, Hildo Meirelles & Carrer, Marcelo José & Saes, Maria Sylvia Macchione & Gomes, Leonardo Augusto de Vasconcelos & Nicolella, Alexandre Chibebe, 2019. "Performance heterogeneity and strategic orientation: An analysis of small farmers of an agrarian reform project in Brazil," Land Use Policy, Elsevier, vol. 86(C), pages 23-30.
    11. Kehinde, Ayodeji Damilola, 2021. "Impact of Credit Access and Cooperative Membership on Cocoa Productivity in Southwestern Nigeria," 2021 Conference, August 17-31, 2021, Virtual 315855, International Association of Agricultural Economists.
    12. Kuhle Prudence Mnisi & Abdul Latif Alhassan, 2021. "Financial structure and cooperative efficiency: A pecking‐order evidence from sugarcane farmers in Eswatini," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 92(2), pages 261-281, June.
    13. Martinson Ankrah Twumasi & Hongyun Zheng & Love Offeibea Asiedu-Ayeh & Anthony Siaw & Yuansheng Jiang, 2023. "Access to Financial Services and Its Impact on Household Income: Evidence from Rural Ghana," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 35(4), pages 869-890, August.
    14. T. O Ojo & L.J. S Baiyegunhi & A. O Salami, 2019. "Impact of Credit Demand on the Productivity of Rice Farmers in South West Nigeria," Journal of Economics and Behavioral Studies, AMH International, vol. 11(1), pages 166-180.

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