IDEAS home Printed from https://ideas.repec.org/a/ags/frraes/207797.html
   My bibliography  Save this article

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

Author

Listed:
  • Simtowe, Franklin
  • Zeller, Manfred
  • Diagne, Aliou

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.

Suggested Citation

  • Simtowe, Franklin & Zeller, Manfred & Diagne, Aliou, 2009. "The impact of credit constraints on the adoption of hybrid maize in Malawi," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement (RAEStud), Institut National de la Recherche Agronomique (INRA), vol. 90(1).
    • Handle: RePEc:ags:frraes:207797
    DOI: 10.22004/ag.econ.207797
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/207797/files/RAEStud-90-1-5-22.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.207797?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    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. Fumio Hayashi, 1985. "The Effect of Liquidity Constraints on Consumption: A Cross-Sectional Analysis," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 100(1), pages 183-206.
    3. Zeldes, Stephen P, 1989. "Consumption and Liquidity Constraints: An Empirical Investigation," Journal of Political Economy, University of Chicago Press, vol. 97(2), pages 305-346, April.
    4. Minde, I., 2008. "Promoting fertilizer use in Africa: current issues and empirical evidence from Malawi, Zambia and Kenya," IWMI Working Papers H042064, International Water Management Institute.
    5. Minde, Isaac J. & Jayne, Thomas S. & Crawford, Eric W. & Ariga, Joshua & Jones, Govereh, 2008. "Promoting Fertilizer Use in Africa: Current Issues and Empirical Evidence from Malawi, Zambia, and Kenya," Food Security International Development Policy Syntheses 54509, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    6. 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, December.
    7. Eicher, Carl K., 1995. "Zimbabwe's maize-based Green Revolution: Preconditions for replication," World Development, Elsevier, vol. 23(5), pages 805-818, May.
    8. repec:cdl:agrebk:836256 is not listed on IDEAS
    9. Smale, Melinda, 1995. ""Maize is life": Malawi's delayed Green Revolution," World Development, Elsevier, vol. 23(5), pages 819-831, May.
    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 829-844, September.
    11. Manfred Zeller & Aliou Diagne & Charles Mataya, 1998. "Market access by smallholder farmers in Malawi: implications for technology adoption, agricultural productivity and crop income," Agricultural Economics, International Association of Agricultural Economists, vol. 19(1-2), pages 219-229, September.
    12. 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 255-298, January.
    13. 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 473-482, April.
    14. Aliou Diagne & Matty Demont, 2007. "Taking a new look at empirical models of adoption: average treatment effect estimation of adoption rates and their determinants," Agricultural Economics, International Association of Agricultural Economists, vol. 37(2‐3), pages 201-210, September.
    15. de Janvry, Alain & Key, Nigel D. & Sadoulet, Elisabeth, 1997. "Agricultural And Rural Development Policy In Latin America: New Directions And New Challenges," CUDARE Working Papers 25096, University of California, Berkeley, Department of Agricultural and Resource Economics.
    16. 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.
    17. 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.
    18. Fernandez-Cornejo, Jorge & McBride, William D., 2002. "Adoption Of Bioengineered Crops," Agricultural Economic Reports 33957, United States Department of Agriculture, Economic Research Service.
    19. Diagne, Aliou & Zeller, Manfred, 2001. "Access to credit and its impact on welfare in Malawi:," Research reports 116, International Food Policy Research Institute (IFPRI).
    20. Tullio Jappelli, 1990. "Who is Credit Constrained in the U. S. Economy?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 105(1), pages 219-234.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Salazar, Cesar & Jaime, Marcela & Pinto, Cristian & Acuna, Andres, 2019. "Interaction between crop insurance and technology adoption decisions: The case of wheat farmers in Chile," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 63(3), July.
    2. Wang, J. & Bi, S. & Lyu, K. & Zhang, C., 2018. "Does Formal Credit Constraint Restrain Agricultural Production?," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277536, International Association of Agricultural Economists.
    3. 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, Norwegian University of Life Sciences, Centre for Land Tenure Studies, revised 10 Oct 2019.
    4. Christina Handschuch & Meike Wollni, 2016. "Improved production systems for traditional food crops: the case of finger millet in western Kenya," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 8(4), pages 783-797, August.
    5. Blanca Isabel Sánchez-Toledano & Zein Kallas & Oscar Palmeros Rojas & José M. Gil, 2018. "Determinant Factors of the Adoption of Improved Maize Seeds in Southern Mexico: A Survival Analysis Approach," Sustainability, MDPI, vol. 10(10), pages 1-22, October.
    6. SANCHEZ, Blanca I. & Kallas, Zein & Gil, Jose M., 2017. "To Adopt, or Not to Adopt the Case Study of the Improved Corn Seeds in Chiapas (México)," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258130, Agricultural and Applied Economics Association.
    7. Henry Kankwamba & Mariam Kadzamira & Karl Pauw, 2018. "How diversified is cropping in Malawi? Patterns, determinants and policy implications," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 10(2), pages 323-338, April.
    8. Uzoamaka Joe-Nkamuke & Kehinde Oluseyi Olagunju & Esther Njuguna-Mungai & Kai Mausch, 2019. "Is there any gender gap in the production of legumes in Malawi? Evidence from the Oaxaca–Blinder decomposition model," Review of Agricultural, Food and Environmental Studies, Springer, vol. 100(1), pages 69-92, December.
    9. Collins Asante-Addo & Jonathan Mockshell & Manfred Zeller & Khalid Siddig & Irene S. Egyir, 2017. "Agricultural credit provision: what really determines farmers’ participation and credit rationing?," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 77(2), pages 239-256, July.
    10. 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.
    11. Ndem Chijioke, Uteh Akaninyene, 2018. "Profitability of Improved Seed Adoption on Small Holders Maize Farmers in Abuja Nigeria," Business and Management Studies, Redfame publishing, vol. 4(4), pages 71-81, December.
    12. Porgo, Mohamed & Kuwornu, John K.M. & Zahonogo, Pam & Jatoe, John Baptist D. & Egyir, Irene S., 2018. "Credit constraints and cropland allocation decisions in rural Burkina Faso," Land Use Policy, Elsevier, vol. 70(C), pages 666-674.
    13. Joe-Nkamuke, Uzoamaka & Oluseyi Olagunju, Kehinde & Njuguna-Mungai, Esther & Mausch, Kai, 2019. "Is there any gender gap in the production of legumes in Malawi? Evidence from the Oaxaca–Blinder decomposition model," Review of Agricultural, Food and Environmental Studies, Institut National de la Recherche Agronomique (INRA), vol. 100(1-4), November.
    14. Ruzzante, Sacha & Labarta, Ricardo & Bilton, Amy, 2021. "Adoption of agricultural technology in the developing world: A meta-analysis of the empirical literature," World Development, Elsevier, vol. 146(C).
    15. Bathan, Bates M. & Gordoncillo, Prudenciano U., 2017. "Determinants of Credit Constraint Among Corn Farmers in Isabela Province, Philippines," Journal of Economics, Management & Agricultural Development, Journal of Economics, Management & Agricultural Development (JEMAD), vol. 3(2), December.
    16. Uzoamaka Joe-Nkamuke & Kehinde Oluseyi Olagunju & Esther Njuguna-Mungai & Kai Mausch, 2019. "Is there any gender gap in the production of legumesin Malawi? Evidence from the Oaxaca–Blinderdecomposition model," Review of Agricultural, Food and Environmental Studies, INRA Department of Economics, vol. 100(1-4), pages 69-92.
    17. Funes, Jose E., 2018. "The role of social interaction in the adoption and geographic diffusion of an agricultural technology: The case of high-iron bean (Phaseolus vulgaris) in Rwanda," 2018 Annual Meeting, August 5-7, Washington, D.C. 273872, Agricultural and Applied Economics Association.
    18. 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.
    19. Maurice Kesonga Nsele & Jules Nkulu Mwine Fyama & Kevin Maréchal & Thomas Dogot, 2022. "Factors Influencing the Sustained Adoption of Innovative Techniques by Urban Farmers in Lubumbashi, Democratic Republic of Congo," Agriculture, MDPI, vol. 12(8), pages 1-19, August.
    20. Benjamin, Emmanuel O. & Ola, Oreoluwa & Sauer, Johannes & Buchenrieder, Gertrud, 2021. "Interaction between agroforestry and women's land tenure security in sub-Saharan Africa: A matrilocal perspective," Forest Policy and Economics, Elsevier, vol. 133(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Simtowe, Franklin & Zeller, Manfred, 2006. "The Impact of Access to Credit on the Adoption of hybrid maize in Malawi: An Empirical test of an Agricultural Household Model under credit market failure," MPRA Paper 45, University Library of Munich, Germany.
    2. Beke, Tite Ehuitché, 2011. "Institutional constraints and adoption of improved rice varieties: Econometric evidence from Ivory Coast," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement (RAEStud), Institut National de la Recherche Agronomique (INRA), vol. 92(2).
    3. Tite Ehuitché Beke, 2011. "Institutional constraints and adoption of improved rice varieties: Econometric evidence from Ivory Coast," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement, INRA Department of Economics, vol. 92(2), pages 117-141.
    4. Collins Asante-Addo & Jonathan Mockshell & Manfred Zeller & Khalid Siddig & Irene S. Egyir, 2017. "Agricultural credit provision: what really determines farmers’ participation and credit rationing?," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 77(2), pages 239-256, July.
    5. Yusuf Ibrahim Kofarmata & Shri Dewi Applanaidu & Sallahuddin Hassan, 2016. "Determinants of Demand for Credit: A Conceptual Review," Asian Journal of Economics and Empirical Research, Asian Online Journal Publishing Group, vol. 3(1), pages 6-10.
    6. Ta Nhat Linh & Hoang Thanh Long & Le Van Chi & Le Thanh Tam & Philippe Lebailly, 2019. "Access to Rural Credit Markets in Developing Countries, the Case of Vietnam: A Literature Review," Sustainability, MDPI, vol. 11(5), pages 1-18, March.
    7. Zeller, Manfred, 1999. "Towards Enhancing the Role of Microfinance for Safety Nets of the Poor," Discussion Papers 280263, University of Bonn, Center for Development Research (ZEF).
    8. Matuschke, Ira & Mishra, Ritesh R. & Qaim, Matin, 2007. "Adoption and Impact of Hybrid Wheat in India," World Development, Elsevier, vol. 35(8), pages 1422-1435, August.
    9. Lambrecht, Isabel & Vanlauwe, Bernard & Merckx, Roel & Maertens, Miet, 2014. "Understanding the Process of Agricultural Technology Adoption: Mineral Fertilizer in Eastern DR Congo," World Development, Elsevier, vol. 59(C), pages 132-146.
    10. María Noelia Garbero, 2012. "Un análisis de los efectos de las restricciones de liquidez en la acumulación de capital humano: Evidencia para Nicaragua," CEDLAS, Working Papers 0136, CEDLAS, Universidad Nacional de La Plata.
    11. Barbara CAVALLETTI & Corrado LAGAZIO & Daniela VANDONE, 2008. "Il credito al consumo in Italia: benessere economico o fragilita’ finanziaria?," Departmental Working Papers 2008-24, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    12. Bhattacharjee, Manojit & Rajeev, Meenakshi, 2014. "Is access to loan adequate for financing capital expenditure?: A household level analysis on some selected states of India," Working Papers 315, Institute for Social and Economic Change, Bangalore.
    13. Jacob L. Vigdor, 2004. "Liquidity Constraints and Housing Prices: Theory and Evidence from the VA Mortgage," NBER Working Papers 10611, National Bureau of Economic Research, Inc.
    14. Abbi M. Kedir & Ibrahim,Gamal, 2012. "Household-Level Credit Constraints in Urban Ethiopia," Ethiopian Journal of Economics, Ethiopian Economics Association, vol. 20(1), September.
    15. Andrés Murcia Pabón, 2007. "Determinantes del acceso al crédito de los hogares colombianos," Revista ESPE - Ensayos Sobre Política Económica, Banco de la República, vol. 25(55), pages 40-83, December.
    16. Donald Cox & Oded Stark, 2007. "On the Demand for Grandchildren: Tied Transfers and the Demonstration Effect," Chapters, in: Luigino Bruni & Pier Luigi Porta (ed.), Handbook on the Economics of Happiness, chapter 18, Edward Elgar Publishing.
    17. Kenneth, Akankwasa & Gerald, Ortmann & Edilegnaw, Wale & Wilberforce, Tushemereirwe, 2012. "Ex-Ante Adoption of New Cooking Banana (Matooke) Hybrids in Uganda Based on Farmers' Perceptions," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 123302, International Association of Agricultural Economists.
    18. Yunhee Chang & Swarn Chatterjee & Jinhee Kim, 2014. "Household Finance and Food Insecurity," Journal of Family and Economic Issues, Springer, vol. 35(4), pages 499-515, December.
    19. Conning, Jonathan & Udry, Christopher, 2007. "Rural Financial Markets in Developing Countries," Handbook of Agricultural Economics, in: Robert Evenson & Prabhu Pingali (ed.), Handbook of Agricultural Economics, edition 1, volume 3, chapter 56, pages 2857-2908, Elsevier.
    20. Yasuyuki Sawada & Kazumitsu Nawata & Masako Ii & Jeong-Joon Lee, 2007. "Did the Credit Crunch in Japan Affect Household Welfare? An Augmented Euler Equation Approach Using Type 5 Tobit Model," CIRJE F-Series CIRJE-F-498, CIRJE, Faculty of Economics, University of Tokyo.

    More about this item

    Keywords

    Crop Production/Industries;

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:frraes:207797. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/inrapfr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.