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Decentralized Targeting of Agricultural Credit Programs: Private Versus Political Intermediaries

Author

Listed:
  • Pushkar Maitra
  • Sandip Mitra
  • Dilip Mookherjee
  • Sujata Visaria

Abstract

We conduct a field experiment in India comparing two ways of delegating selection of microcredit clients among smallholder farmers to local intermediaries: a private trader (TRAIL), versus a local–government appointee (GRAIL). Selected beneficiaries in both schemes were equally likely to take up and repay loans, and experienced similar increases in borrowing and farm output. However farm profits increased and unit costs of production decreased significantly only in TRAIL. While there is some evidence of superior selection by ability and landholding in TRAIL, the results are mainly driven by greater reduction of unit production costs for TRAIL treated farmers than GRAIL treated farmers of similar ability or landholding. We develop and test a model where the TRAIL agents’ role as middlemen in the agricultural supply chain enabled and motivated them to offer treated farmers business advice, which helped them lower unit costs.

Suggested Citation

  • Pushkar Maitra & Sandip Mitra & Dilip Mookherjee & Sujata Visaria, 2024. "Decentralized Targeting of Agricultural Credit Programs: Private Versus Political Intermediaries," Journal of the European Economic Association, European Economic Association, vol. 22(6), pages 2648-2699.
    • Handle: RePEc:oup:jeurec:v:22:y:2024:i:6:p:2648-2699.
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    File URL: http://hdl.handle.net/10.1093/jeea/jvae018
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    1. repec:osf:osfxxx:nwp8k_v1 is not listed on IDEAS
    2. Deserranno, Erika & Bandiera, Oriana & Rasul, Imran, 2020. "Development Policy through the Lens of Social Structure," CEPR Discussion Papers 14876, C.E.P.R. Discussion Papers.
    3. Manzoor H. Dar & Alain de Janvry & Kyle Emerick & Elisabeth Sadoulet & Eleanor Wiseman, 2024. "Private Input Suppliers as Information Agents for Technology Adoption in Agriculture," American Economic Journal: Applied Economics, American Economic Association, vol. 16(2), pages 219-248, April.
    4. Oriana Bandiera & Robin Burgess & Erika Deserranno & Ricardo Morel & Munshi Sulaiman & Imran Rasul, 2023. "Social Incentives, Delivery Agents, and the Effectiveness of Development Interventions," Journal of Political Economy Microeconomics, University of Chicago Press, vol. 1(1), pages 162-224.
    5. Masselus, Lise & Petrik, Christina & Ankel-Peters, Jörg, 2024. "Lost in the design space? Construct validity in the microfinance literature," Ruhr Economic Papers 1097, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    6. Gangadharan, Lata & Maitra, Pushkar & Vecci, Joseph & Veettil, Prakashan Chellattan & Villeval, Marie Claire, 2025. "Do Advisors’ Status and Identity Shape Adherence to Advice?," IZA Discussion Papers 18280, Institute of Labor Economics (IZA).
    7. Pushkar Maitra & Sandip Mitra & Dilip Mookherjee & Sujata Visaria, 2021. "Evaluating the Distributive Effects of a Development Intervention," HKUST CEP Working Papers Series 202106, HKUST Center for Economic Policy.
    8. M. Ali Choudhary & Anil K. Jain, 2022. "Credit access and relational contracts: An experiment testing informational and contractual frictions for Pakistani farmers," International Finance Discussion Papers 2022, Board of Governors of the Federal Reserve System (U.S.).
    9. Matthew Olckers & Toby Walsh, 2022. "Manipulation and Peer Mechanisms: A Survey," Papers 2210.01984, arXiv.org, revised May 2024.
    10. Beuermann, Diether W. & Hoffmann, Bridget & Stampini, Marco & Vargas, David L. & Vera-Cossio, Diego, 2025. "Shooting a moving target: Evaluating targeting tools for social programs when income fluctuates," Journal of Development Economics, Elsevier, vol. 172(C).
    11. Maitra, Pushkar & Mitra, Sandip & Mookherjee, Dilip & Visaria, Sujata, 2022. "Evaluating the distributive effects of a micro-credit intervention," Journal of Development Economics, Elsevier, vol. 158(C).
    12. Oriana Bandiera & Robin Burgess & Erika Deserranno & Ricardo Morel & Imran Rasul & Munshi Sulaiman & Jack Thiemel, 2022. "Microfinance and Diversification," Economica, London School of Economics and Political Science, vol. 89(S1), pages 239-275, June.
    13. Anindya Bhattacharya & Anirban Kar & Alita Nandi, 2023. "Asymmetric networks, clientelism and their impacts: households' access to workfare employment in rural India," Papers 2304.04236, arXiv.org.

    More about this item

    JEL classification:

    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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