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The impact of credit constraints on the adoption of hybrid maize in Malawi

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  • Franklin Simtowe

    ()
    (International Crops Research Institute for the Semi Arid Tropics ICRISAT – Nairobi, PO BOX 39063, Nairobi, Kenya)

  • Manfred Zeller

    (University of Hohenheim, Institute of Agricultural Economics and Social Sciences in the Tropics and Subtropics, Germany)

  • Aliou Diagne

    (Africa Rice Centre, Cotonou, Benin)

Abstract

This paper investigates the impact of credit constraints on the adoption of hybrid maize among rural households in Malawi. To address the endogenous and binary nature of the household's credit constraints status, we employ a treatment-effects model to consistently estimate the effect of credit constraints. Results reveal that after effectively correcting for endogeneity, credit constraints have a negative and significant effect on the amount of land allocated to hybrid maize. Results also show that farmers with larger land holdings allocate more land to hybrid maize. Although less likely to report credit constraints, older farmers allocate less land to hybrid maize than younger farmers. These findings suggest that there is scope for increasing the cultivation of hybrid maize in Malawi if credit is targeted at younger farmers that are credit-constrained.

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Bibliographic Info

Article provided by INRA Department of Economics in its journal Review of Agricultural and Environmental Studies.

Volume (Year): 90 (2009)
Issue (Month): 1 ()
Pages: 5-22

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Handle: RePEc:rae:jourae:v:90:y:2009:i:1:p:5-22

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Keywords: credit constraints; hybrid maize; adoption; treatment-effect; endogenous; Malawi;

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References

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  1. Diagne, Aliou & Zeller, Manfred & Sharma, Manohar, 2000. "Empirical measurements of households' access to credit and credit constraints in developing countries," FCND briefs 90, International Food Policy Research Institute (IFPRI).
  2. Zeller, Manfred & Diagne, Aliou & Mataya, Charles, 1998. "Market access by smallholder farmers in Malawi: implications for technology adoption, agricultural productivity and crop income," Agricultural Economics: The Journal of the International Association of Agricultural Economists, International Association of Agricultural Economists, vol. 19(1-2), September.
  3. Feder, Gershon & Just, Richard E & Zilberman, David, 1985. "Adoption of Agricultural Innovations in Developing Countries: A Survey," Economic Development and Cultural Change, University of Chicago Press, vol. 33(2), pages 255-98, January.
  4. Zeller, Manfred & Diagne, Aliou & Mataya, Charles, 1998. "Market access by smallholder farmers in Malawi: implications for technology adoption, agricultural productivity and crop income," Agricultural Economics, Blackwell, vol. 19(1-2), pages 219-229, September.
  5. Yasuyuki SAWADA & Kensuke KUBO & Nobuhiko FUWA & Seiro ITO & Takashi KUROSAKI, 2006. "On The Mother And Child Labor Nexus Under Credit Constraints: Findings From Rural India," The Developing Economies, Institute of Developing Economies, vol. 44(4), pages 465-499.
  6. Eswaran, Mukesh & Kotwal, Ashok, 1990. "Implications of Credit Constraints for Risk Behaviour in Less Developed Economies," Oxford Economic Papers, Oxford University Press, vol. 42(2), pages 473-82, April.
  7. Zilberman, David & Just, Richard E. & Rausser, Gordon C., 1981. "The distributional effects of new technology under risk," CUDARE Working Paper Series 100R, University of California at Berkeley, Department of Agricultural and Resource Economics and Policy.
  8. Zeldes, Stephen P, 1989. "Consumption and Liquidity Constraints: An Empirical Investigation," Journal of Political Economy, University of Chicago Press, vol. 97(2), pages 305-46, April.
  9. Fernandez-Cornejo, Jorge & McBride, William D., 2002. "Adoption Of Bioengineered Crops," Agricultural Economics Reports 33957, United States Department of Agriculture, Economic Research Service.
  10. Cragg, John G, 1971. "Some Statistical Models for Limited Dependent Variables with Application to the Demand for Durable Goods," Econometrica, Econometric Society, vol. 39(5), pages 829-44, September.
  11. Jappelli, Tullio, 1990. "Who Is Credit Constrained in the U.S. Economy?," The Quarterly Journal of Economics, MIT Press, vol. 105(1), pages 219-34, February.
  12. Diagne, Aliou & Zeller, Manfred, 2001. "Access to credit and its impact on welfare in Malawi:," Research reports 116, International Food Policy Research Institute (IFPRI).
  13. Smale, Melinda, 1995. ""Maize is life": Malawi's delayed Green Revolution," World Development, Elsevier, vol. 23(5), pages 819-831, May.
  14. Smale, Melinda & Phiri, Alexander, 1998. "Institutional Change and Discontinuities in Farmers' Use of Hybrid Maize Seed and Fertilizer in Malawi: Findings from the 1996-97 CIMMYT/ MoALD Survey," Economics Working Papers 7674, CIMMYT: International Maize and Wheat Improvement Center.
  15. repec:cdl:agrebk:836256 is not listed on IDEAS
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Cited by:
  1. Holden, Stein & Mangisoni, Julius, 2013. "Input subsidies and improved maize varieties in Malawi: -What can we learn from the impacts in a drought year?," CLTS Working Papers 7/13, Centre for Land Tenure Studies, Norwegian University of Life Sciences.
  2. Ricker-Gilbert, Jacob & Jones, Michael, 2012. "Does Access to Storage Protectant Increase Smallholder Adoption of Improved Maize Seed? Insights from Malawi," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124658, Agricultural and Applied Economics Association.
  3. Christina Handschuch & Meike Wollni, 2013. "Improved production systems for traditional food crops: The case of finger millet in Western Kenya," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 141, Courant Research Centre PEG.
  4. Benjamin, Olatunbosun, 2012. "Improving credit allocation to sustainable agriculture in Sub-Saharan Africa: Review of bio-based economy benefits," MPRA Paper 41313, University Library of Munich, Germany.

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