IDEAS home Printed from https://ideas.repec.org/a/ags/qjiage/155474.html
   My bibliography  Save this article

Conceptualising the Effects of Seasonal Financial Market Failures and Credit Rationing in Applied Rural Household Models

Author

Listed:
  • Dorward, Andrew

Abstract

A wide variety of farm household models have provided a valuable theoretical basis for empirical and conceptual analysis of interactions between production and consumption resource allocations of poor rural people. A weakness of common applications of many such models, and unfortunately of much analysis, is failure to routinely also recognise and adequately describe the fundamental seasonal nature of most agricultural production and the effects of pervasive seasonal finance market failures on poor rural people’s behaviour and welfare. This is despite considerable theoretical work demonstrating the importance of seasonal financial market failures as constraints on agricultural development. A general model recognising this is presented, with graphical applications showing the potential importance of seasonal finance constraints on farm households’ behaviour and welfare. Formal methods for allowing for the effects of seasonal finance constraints on household responses to policy and other change should be standard tools used by applied rural development economists.

Suggested Citation

  • Dorward, Andrew, 2012. "Conceptualising the Effects of Seasonal Financial Market Failures and Credit Rationing in Applied Rural Household Models," Quarterly Journal of International Agriculture, Humboldt-Universitaat zu Berlin, vol. 51(2), pages 1-21, May.
    • Handle: RePEc:ags:qjiage:155474
    DOI: 10.22004/ag.econ.155474
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/155474/files/1_Dorward.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.155474?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
    ---><---

    References listed on IDEAS

    as
    1. Alwang, Jeffrey & Siegel, P. B., 1999. "Labor Shortages on Small Landholdings in Malawi: Implications for Policy Reforms," World Development, Elsevier, vol. 27(8), pages 1461-1475, August.
    2. Michael R. Carter & Pedro Olinto, 2003. "Getting Institutions “Right” for Whom? Credit Constraints and the Impact of Property Rights on the Quantity and Composition of Investment," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(1), pages 173-186.
    3. Martin Petrick, 2005. "Empirical measurement of credit rationing in agriculture: a methodological survey," Agricultural Economics, International Association of Agricultural Economists, vol. 33(2), pages 191-203, September.
    4. Michael R. Carter & Keith D. Wiebe, 1990. "Access to Capital and Its Impact on Agrarian Structure and Productivity in Kenya," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 72(5), pages 1146-1150.
    5. Michael Carter & Christopher Barrett, 2006. "The economics of poverty traps and persistent poverty: An asset-based approach," Journal of Development Studies, Taylor & Francis Journals, vol. 42(2), pages 178-199.
    6. Carter, Michael R. & Zimmerman, Frederick J., 2000. "The dynamic cost and persistence of asset inequality in an agrarian economy," Journal of Development Economics, Elsevier, vol. 63(2), pages 265-302, December.
    7. J. Taylor & Irma Adelman, 2003. "Agricultural Household Models: Genesis, Evolution, and Extensions," Review of Economics of the Household, Springer, vol. 1(1), pages 33-58, January.
    8. Eswaran, Mukesh & Kotwal, Ashok, 1986. "Access to Capital and Agrarian Production Organisation," Economic Journal, Royal Economic Society, vol. 96(382), pages 482-498, June.
    9. 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.
    10. Petrick, Martin, 2004. "Credit rationing of Polish farm households: a theoretical and empirical analysis," Studies on the Agricultural and Food Sector in Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 26, number 93022.
    11. Holden, Stein T., 1993. "Peasant household modelling: Farming systems evolution and sustainability in northern Zambia," Agricultural Economics, Blackwell, vol. 9(3), pages 241-267, September.
    12. Smith, Lisa C., 1998. "Macroeconomic Adjustment And The Balance Of Bargaining Power In Rural West African Households," 1998 Annual meeting, August 2-5, Salt Lake City, UT 20865, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    13. Holger Seebens & Johannes Sauer, 2007. "Bargaining power and efficiency-rural households in Ethiopia," Journal of International Development, John Wiley & Sons, Ltd., vol. 19(7), pages 895-918.
    14. Stephen R. Boucher & Catherine Guirkinger & Carolina Trivelli, 2009. "Direct Elicitation of Credit Constraints: Conceptual and Practical Issues with an Application to Peruvian Agriculture," Economic Development and Cultural Change, University of Chicago Press, vol. 57(4), pages 609-640, July.
    15. de Janvry, A, et al, 1992. "Structural Adjustment and the Peasantry in Morocco: A Computable Household Model," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 19(4), pages 427-453.
    16. Emmanuel Skoufias, 1993. "Seasonal Labor Utilization in Agriculture: Theory and Evidence from Agrarian Households in India," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(1), pages 20-32.
    17. Ellis,Frank, 1993. "Peasant Economics," Cambridge Books, Cambridge University Press, number 9780521457118.
    18. Alain Janvry & Elisabeth Sadoulet, 2006. "Progress in the Modeling of Rural Households’ Behavior under Market Failures," Economic Studies in Inequality, Social Exclusion, and Well-Being, in: Alain Janvry & Ravi Kanbur (ed.), Poverty, Inequality and Development, chapter 0, pages 155-181, Springer.
    19. Stephen R. Boucher & Michael R. Carter & Catherine Guirkinger, 2008. "Risk Rationing and Wealth Effects in Credit Markets: Theory and Implications for Agricultural Development," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(2), pages 409-423.
    20. Bardhan, Pranab & Udry, Christopher, 1999. "Development Microeconomics," OUP Catalogue, Oxford University Press, number 9780198773719.
    21. Dorward, A. R., 1996. "Modelling diversity, change and uncertainty in peasant agriculture in northern Malawi," Agricultural Systems, Elsevier, vol. 51(4), pages 469-486, August.
    22. Binswanger, Hans P & McIntire, John, 1987. "Behavioral and Material Determinants of Production Relations in Land-Abundant Tropical Agriculture," Economic Development and Cultural Change, University of Chicago Press, vol. 36(1), pages 73-99, October.
    23. Alain Janvry & Ravi Kanbur (ed.), 2006. "Poverty, Inequality and Development," Economic Studies in Inequality, Social Exclusion, and Well-Being, Springer, number 978-0-387-29748-4, Fall.
    24. Katia Covarrubias & Benjamin Davis & Paul Winters, 2012. "From protection to production: productive impacts of the Malawi Social Cash Transfer scheme," Journal of Development Effectiveness, Taylor & Francis Journals, vol. 4(1), pages 50-77, March.
    25. Barnett, Barry J. & Barrett, Christopher B. & Skees, Jerry R., 2008. "Poverty Traps and Index-Based Risk Transfer Products," World Development, Elsevier, vol. 36(10), pages 1766-1785, October.
    26. McElroy, Marjorie B & Horney, Mary Jean, 1981. "Nash-Bargained Household Decisions: Toward a Generalization of the Theory of Demand," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 22(2), pages 333-349, June.
    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. Allen, James E., 2018. "Are agricultural markets more developed around cities? Testing for urban heterogeneity in separability in Tanzania," Food Policy, Elsevier, vol. 79(C), pages 199-212.
    2. 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.

    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. Ali, Daniel Ayalew & Deininger, Klaus & Duponchel, Marguerite, 2014. "Credit constraints, agricultural productivity, and rural nonfarm participation : evidence from Rwanda," Policy Research Working Paper Series 6769, The World Bank.
    2. Béatrice D'HOMBRES & Jean-Louis ARCAND, 2006. "Testing for Separation in Agricultural Household Models and Unobservable Household-Specific Effects," Working Papers 200632, CERDI.
    3. Haile, Kaleab K. & Nillesen, Eleonora & Tirivayi, Nyasha, 2020. "Impact of formal climate risk transfer mechanisms on risk-aversion: Empirical evidence from rural Ethiopia," World Development, Elsevier, vol. 130(C).
    4. Eleonora Matteazzi & Martina Menon & Federico Perali, 2017. "The Collective Farm-household Model: Policy and Welfare Simulations," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 39(1), pages 111-153.
    5. Turvey, C. G., 2017. "IFAD RESEARCH SERIES 10 - Inclusive finance and inclusive rural transformation," IFAD Research Series 280048, International Fund for Agricultural Development (IFAD).
    6. Ayalew Ali, Daniel & Deininger, Klaus, 2012. "Causes and implications of credit rationing in rural Ethiopia : the importance of spatial variation," Policy Research Working Paper Series 6096, The World Bank.
    7. Balana, Bedru & Oyeyemi, Motunrayo, 2021. "Credit Constraints and Adoption of Agricultural Technologies in Developing Countries? Evidence from Nigeria," 2021 Conference, August 17-31, 2021, Virtual 315347, International Association of Agricultural Economists.
    8. Unal Seven & Semih Tumen, 2020. "Agricultural Credits And Agricultural Productivity: Cross-Country Evidence," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 65(supp01), pages 161-183, December.
    9. Carter, Michael & Morrow, John, 2014. "The political economy of inclusive rural growth," LSE Research Online Documents on Economics 60268, London School of Economics and Political Science, LSE Library.
    10. Quentin Stoeffler & Michael Carter & Catherine Guirkinger & Wouter Gelade, 2022. "The Spillover Impact of Index Insurance on Agricultural Investment by Cotton Farmers in Burkina Faso," The World Bank Economic Review, World Bank, vol. 36(1), pages 114-140.
    11. Malcolm Keswell & Michael R. Carter, 2011. "Poverty and Land Distribution: Evidence from a Natural Experiment," WIDER Working Paper Series wp-2011-046, World Institute for Development Economic Research (UNU-WIDER).
    12. López-Feldman, Alejandro, 2014. "Shocks, Income and Wealth: Do They Affect the Extraction of Natural Resources by Rural Households?," World Development, Elsevier, vol. 64(S1), pages 91-100.
    13. Zezza, Alberto & Llambi, Luis, 2002. "Meso-Economic Filters Along the Policy Chain: Understanding the Links Between Policy Reforms and Rural Poverty in Latin America," World Development, Elsevier, vol. 30(11), pages 1865-1884, November.
    14. de Janvry, Alain & Sadoulet, Elisabeth, 2020. "Using agriculture for development: Supply- and demand-side approaches," World Development, Elsevier, vol. 133(C).
    15. Balana, B. B. & Mekonnen, D. & Haile, B. & Hagos, Fitsum & Yimam, S. & Ringler, C., 2022. "Demand and supply constraints of credit in smallholder farming: evidence from Ethiopia and Tanzania," Papers published in Journals (Open Access), International Water Management Institute, pages 159:106033..
    16. Diana Fletschner & Catherine Guirkinger & Steve Boucher, 2010. "Risk, Credit Constraints and Financial Efficiency in Peruvian Agriculture," Journal of Development Studies, Taylor & Francis Journals, vol. 46(6), pages 981-1002.
    17. Conning, Jonathan H. & Robinson, James A., 2007. "Property rights and the political organization of agriculture," Journal of Development Economics, Elsevier, vol. 82(2), pages 416-447, March.
    18. Kimhi, Ayal, 2003. "Plot Size And Maize Productivity In Zambia: The Inverse Relationship Re-Examined," Discussion Papers 14980, Hebrew University of Jerusalem, Department of Agricultural Economics and Management.
    19. Keswell, Malcolm & Carter, Michael R., 2014. "Poverty and land redistribution," Journal of Development Economics, Elsevier, vol. 110(C), pages 250-261.
    20. Catherine Guirkinger & Stephen R. Boucher, 2008. "Credit constraints and productivity in Peruvian agriculture," Agricultural Economics, International Association of Agricultural Economists, vol. 39(3), pages 295-308, November.

    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:qjiage:155474. 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/iahubde.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.