IDEAS home Printed from https://ideas.repec.org/a/rnd/arjebs/v11y2019i1p166-180.html
   My bibliography  Save this article

Impact of Credit Demand on the Productivity of Rice Farmers in South West Nigeria

Author

Listed:
  • T. O Ojo
  • L.J. S Baiyegunhi
  • A. O Salami

Abstract

Employing cross-sectional data from 360 rice farmers selected from three states in South West Nigeria, the study analyzes the impact of credit demand on the productivity of rice farmers. An Endogenous Switching Regression Model (ESRM) that accounts for both heterogeneity and sample selection biases were used to estimate the impact of credit demand on rice productivity in South West Nigeria. In addition, a Tobit regression model was employed to measure the level of participation of rice farmers in the credit market. The result of the first stage (probit model) of the ESRM revealed that household assets, access to service, climate variables, regional variables, and transaction cost are statistically significant in influencing farmers’ credit demand decision. The results of the second stage of the ESRM indicate factors such as household assets and access to service were statistically significant in explaining variations in rice productivity among participants and non-participants in the credit market. Furthermore, the results of the Tobit model showed that the farmers’ location income from rice farming experience, interest rate, and distance to the source of credit are statistically significant determinants of the amount of credit received. These findings suggest that facilitating farmers’ access to credit will improve rice productivity. Therefore, it is imperative for government and development partner to work together in order to improve the conditions for suitable agricultural credit access to rice farmers, especially a review of interest rates. A necessary addition should be developed to the assistance already being provided under Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) in the form of loan guarantees and other risk-sharing incentives, such as a regulatory environment that supports the modern contractual obligations that are characteristic of well-functioning agricultural financing. This would not only contribute to the intensification of rice production in Nigeria to meet its increasing rice demand, but also improve rice farmers’ productivity and their households’ incomes.

Suggested Citation

  • 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.
    • Handle: RePEc:rnd:arjebs:v:11:y:2019:i:1:p:166-180
    DOI: 10.22610/jebs.v11i1(J).2757
    as

    Download full text from publisher

    File URL: https://ojs.amhinternational.com/index.php/jebs/article/view/2757/1817
    Download Restriction: no
    File URL: https://ojs.amhinternational.com/index.php/jebs/article/view/2757
    Download Restriction: no
    File URL: https://libkey.io/10.22610/jebs.v11i1(J).2757?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. Sreejith Aravindakshan & Frederick Rossi & T. S. Amjath-Babu & Prakashan Chellattan Veettil & Timothy J. Krupnik, 2018. "Application of a bias-corrected meta-frontier approach and an endogenous switching regression to analyze the technical efficiency of conservation tillage for wheat in South Asia," Journal of Productivity Analysis, Springer, vol. 49(2), pages 153-171, June.
    2. Chandra S. Kumar & Calum G. Turvey & Jaclyn D. Kropp, 2013. "The Impact of Credit Constraints on Farm Households: Survey Results from India and China," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 35(3), pages 508-527.
    3. Muhammad Iqbal & Munir Ahmad & Kalbe Abbas, 2003. "The Impact of Institutional Credit on Agricultural Production in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 42(4), pages 469-485.
    4. 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.
    5. Pal, Debdatta & Laha, Arnab K., 2015. "Sectoral credit choice in rural India," Journal of choice modelling, Elsevier, vol. 14(C), pages 1-16.
    6. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    7. Bola Amoke Awotide & Aziz A. Karimov & Aliou Diagne, 2016. "Agricultural technology adoption, commercialization and smallholder rice farmers’ welfare in rural Nigeria," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 4(1), pages 1-24, December.
    8. repec:lje:journl:v:2:y:2007:i:2:p:1-25 is not listed on IDEAS
    9. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    10. Hitayezu, Patrick & Okello, Julius Juma & Gor, Christopher O., 2010. "Drivers of Household Participation in the Rural Non-Farm Labor Markets in the Post-War Rwanda," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61682, Agricultural and Applied Economics Association.
    11. Siddiqi, Mohammad Nejatullah, 2004. "Riba, Bank Interest and the Rational of its Prohibition (Research Paper)," Occasional Papers 205, The Islamic Research and Teaching Institute (IRTI).
    12. Michael Lokshin & Zurab Sajaia, 2004. "Maximum likelihood estimation of endogenous switching regression models," Stata Journal, StataCorp LP, vol. 4(3), pages 282-289, September.
    13. McDonald, John F & Moffitt, Robert A, 1980. "The Uses of Tobit Analysis," The Review of Economics and Statistics, MIT Press, vol. 62(2), pages 318-321, May.
    14. Hausman, Jerry A., 1983. "Specification and estimation of simultaneous equation models," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 1, chapter 7, pages 391-448, Elsevier.
    15. Olomola, Aderbigbe & Gyimah-Brempong, Kwabena, 2014. "Loan demand and rationing among small-scale farmers in Nigeria:," IFPRI discussion papers 1403, International Food Policy Research Institute (IFPRI).
    16. Dean S. Karlan & Jonathan Zinman, 2008. "Credit Elasticities in Less-Developed Economies: Implications for Microfinance," American Economic Review, American Economic Association, vol. 98(3), pages 1040-1068, June.
    17. Arega Alene & V. Manyong, 2007. "The effects of education on agricultural productivity under traditional and improved technology in northern Nigeria: an endogenous switching regression analysis," Empirical Economics, Springer, vol. 32(1), pages 141-159, April.
    18. Nyangena, Wilfred & Köhlin, Gunnar, 2008. "Estimating Returns to Soil and Water Conservation Investments: An Application to Crop Yield in Kenya," RFF Working Paper Series dp-08-32-efd, Resources for the Future.
    19. Awotide, B.A. & Abdoulaye, Tahirou & Alene, Arega & Manyong, Victor M., 2015. "Impact of Access to Credit on Agricultural Productivity: Evidence from Smallholder Cassava Farmers in Nigeria," 2015 Conference, August 9-14, 2015, Milan, Italy 210969, International Association of Agricultural Economists.
    20. Akram, Q. Farooq & Rime, Dagfinn & Sarno, Lucio, 2008. "Arbitrage in the foreign exchange market: Turning on the microscope," Journal of International Economics, Elsevier, vol. 76(2), pages 237-253, December.
    21. Benin, S. & Smale, M. & Pender, J. & Gebremedhin, B. & Ehui, S., 2004. "The economic determinants of cereal crop diversity on farms in the Ethiopian highlands," Agricultural Economics, Blackwell, vol. 31(2-3), pages 197-208, December.
    22. Rahman, Sanzidur, 2009. "Whether crop diversification is a desired strategy for agricultural growth in Bangladesh?," Food Policy, Elsevier, vol. 34(4), pages 340-349, August.
    23. Mishra, Ashok K. & El-Osta, Hisham S. & Morehart, Mitchell J. & Johnson, James D. & Hopkins, Jeffrey W., 2002. "Income, Wealth, And The Economic Well-Being Of Farm Households," Agricultural Economic Reports 33967, United States Department of Agriculture, Economic Research Service.
    24. Jeffrey M. Perloff & Lori Lynch & Susan M. Gabbard, 1998. "Migration of Seasonal Agricultural Workers," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(1), pages 154-164.
    25. Amemiya, Takeshi, 1979. "The Estimation of a Simultaneous-Equation Tobit Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 20(1), pages 169-181, February.
    26. Uchenna Obih & Lloyd J.S. Baiyegunhi, 2017. "A Review of Factors Infl uencing Domestic Demand-Supply Gap and High Import Bills for Rice in Nigeria: Implications for Development of Rice Sector," Africagrowth Agenda, Africagrowth Institute, vol. 14(3), pages 18-21.
    27. Anthony Rezitis & Kostas Tsiboukas & Stauros Tsoukalas, 2002. "Measuring technical efficiency in the Greek agricultural sector," Applied Economics, Taylor & Francis Journals, vol. 34(11), pages 1345-1357.
    28. Diagne, Aliou & Zeller, Manfred, 2001. "Access to credit and its impact on welfare in Malawi:," Research reports 116, International Food Policy Research Institute (IFPRI).
    29. Feder, Gershon & Lau, Lawrence J. & Lin, Justin Y. & Xiaopeng, Luo, 1989. "Agricultural credit and farm performance in China," Journal of Comparative Economics, Elsevier, vol. 13(4), pages 508-526, December.
    30. Shehla Amjad & SAF Hasnu, 2007. "Smallholders’ Access to Rural Credit: Evidence from Pakistan," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 12(2), pages 1-25, Jul-Dec.
    31. Lee, Lung-Fei, 1978. "Unionism and Wage Rates: A Simultaneous Equations Model with Qualitative and Limited Dependent Variables," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 19(2), pages 415-433, June.
    32. Keith O. Fuglie & Darrell J. Bosch, 1995. "Economic and Environmental Implications of Soil Nitrogen Testing: A Switching-Regression Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(4), pages 891-900.
    33. Joachim Nyemeck BINAM & Jim GOCKOWSKI & Guy Blaise NKAMLEU, 2008. "Technical Efficiency And Productivity Potential Of Cocoa Farmers In West African Countries," The Developing Economies, Institute of Developing Economies, vol. 46(3), pages 242-263, September.
    34. 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.
    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. T. O. Ojo & A. A. Ogundeji & S. C. Babu & T. Alimi, 2020. "Estimating financing gaps in rice production in Southwestern Nigeria," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 9(1), pages 1-18, December.
    2. Ojo, Temitope O. & Baiyegunhi, Lloyd J.S & Adetoro, Adetoso A. & Ogundeji, Abiodun A., 2021. "Adoption of Soil and Water Conservation Technology and Its Impact on the Productivity of Smallholder Rice Farmers in Southwest, Nigeria," 2021 Conference, August 17-31, 2021, Virtual 314981, International Association of Agricultural Economists.
    3. Anwasia Anthonia Ifeoma & Anselm Anibueze Enete & Ezeibe Adaku Bridget, 2023. "Determinant and Impact of Renewable Energy Utilization on Farm Productivity in South-South Nigeria," Journal of Agriculture and Crops, Academic Research Publishing Group, vol. 9(1), pages 105-113, 01-2023.
    4. Ojo, T.O. & Ogundeji, A.A. & Belle, J.A., 2021. "Climate change perception and impact of on-farm demonstration on intensity of adoption of adaptation strategies among smallholder farmers in South Africa," Technological Forecasting and Social Change, Elsevier, vol. 172(C).
    5. Simphiwe Innocentia Hlatshwayo & Temitope Oluwaseun Ojo & Albert Thembinkosi Modi & Tafadzwanashe Mabhaudhi & Rob Slotow & Mjabuliseni Simon Cloapas Ngidi, 2022. "The Determinants of Market Participation and Its Effect on Food Security of the Rural Smallholder Farmers in Limpopo and Mpumalanga Provinces, South Africa," Agriculture, MDPI, vol. 12(7), pages 1-16, July.
    6. Temitope Oluwaseun Ojo & Abiodun A. Ogundeji & Chijioke U. Emenike, 2022. "Does Adoption of Climate Change Adaptation Strategy Improve Food Security? A Case of Rice Farmers in Ogun State, Nigeria," Land, MDPI, vol. 11(11), pages 1-16, October.
    7. Girma Gezimu Gebre & Yuichiro Amekawa & Asmiro Abeje Fikadu & Dil Bahadur Rahut, 2023. "Do climate change adaptation strategies improve farmers’ food security in Tanzania?," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 15(3), pages 629-647, June.
    8. Ojo, Temitope & Ogundeji, Abiodun A. & Belle, Johannes A. & Demont, Matty, 2021. "A Three-Stage Approach of Understanding Climate Change Perception and Adaptation Strategies Among Smallholder Farmers in South Africa," 2021 Conference, August 17-31, 2021, Virtual 315854, International Association of Agricultural Economists.
    9. Thinda, K.T. & Ogundeji, A.A. & Belle, J.A. & Ojo, T.O., 2020. "Understanding the adoption of climate change adaptation strategies among smallholder farmers: Evidence from land reform beneficiaries in South Africa," Land Use Policy, Elsevier, vol. 99(C).
    10. Ndlovu, P.N. & Thamaga-Chitja, J.M. & Ojo, T.O., 2021. "Factors influencing the level of vegetable value chain participation and implications on smallholder farmers in Swayimane KwaZulu-Natal," Land Use Policy, Elsevier, vol. 109(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. 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.
    2. Kirtti Ranjan Paltasingh & Phanindra Goyari, 2018. "Impact of farmer education on farm productivity under varying technologies: case of paddy growers in India," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 6(1), pages 1-19, December.
    3. Sreejith Aravindakshan & Frederick Rossi & T. S. Amjath-Babu & Prakashan Chellattan Veettil & Timothy J. Krupnik, 2018. "Application of a bias-corrected meta-frontier approach and an endogenous switching regression to analyze the technical efficiency of conservation tillage for wheat in South Asia," Journal of Productivity Analysis, Springer, vol. 49(2), pages 153-171, June.
    4. Ojo, T.O. & Baiyegunhi, L.J.S., 2020. "Determinants of climate change adaptation strategies and its impact on the net farm income of rice farmers in south-west Nigeria," Land Use Policy, Elsevier, vol. 95(C).
    5. Coromaldi, Manuela & Pallante, Giacomo & Savastano, Sara, 2015. "Adoption of modern varieties, farmers' welfare and crop biodiversity: Evidence from Uganda," Ecological Economics, Elsevier, vol. 119(C), pages 346-358.
    6. Mukasa Adamon N. & Anthony M. Simpasa & Adeleke Oluwole Salami, 2017. "Working Paper 247 - Credit constraints and farm productivity: Micro-level evidence from smallholder farmers in Ethiopia," Working Paper Series 2356, African Development Bank.
    7. Song, Chunxiao & Liu, Ruifeng & Oxley, Oxley & Ma, Hengyun, 2018. "The adoption and impact of engineering-type measures to address climate change: evidence from the major grain-producing areas in China," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 62(4), October.
    8. Muuz Hadush, 2021. "Does it pay to switch from free grazing to stall feeding? Impact of stall feeding practice on household welfare in Tigrai Ethiopia," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 9(1), pages 1-29, December.
    9. Bello, Lateef Olalekan & Baiyegunhi, Lloyd & Mignouna, Djana & Adeoti, Razack & Donstop-Nguezet, Paul Matin & Abdoulaye, Tahirou & Manyong, Victor & Bamba, Zoumana & Awotide, Bola Amoke, 2021. "Impact of Youth-in-Agribusiness Program on Employment Creation in Nigeria," 2021 Conference, August 17-31, 2021, Virtual 315135, International Association of Agricultural Economists.
    10. Awotide, B.A. & Abdoulaye, Tahirou & Alene, Arega & Manyong, Victor M., 2015. "Impact of Access to Credit on Agricultural Productivity: Evidence from Smallholder Cassava Farmers in Nigeria," 2015 Conference, August 9-14, 2015, Milan, Italy 210969, International Association of Agricultural Economists.
    11. Ojo, Temitope O. & Baiyegunhi, Lloyd J.S & Adetoro, Adetoso A. & Ogundeji, Abiodun A., 2021. "Adoption of Soil and Water Conservation Technology and Its Impact on the Productivity of Smallholder Rice Farmers in Southwest, Nigeria," 2021 Conference, August 17-31, 2021, Virtual 314981, International Association of Agricultural Economists.
    12. Tufa, Adane Hirpa & Alene, Arega D. & Manda, Julius & Akinwale, M.G. & Chikoye, David & Feleke, Shiferaw & Wossen, Tesfamicheal & Manyong, Victor, 2019. "The productivity and income effects of adoption of improved soybean varieties and agronomic practices in Malawi," World Development, Elsevier, vol. 124(C), pages 1-1.
    13. AGBENO, Yao, 2021. "Impact of Access to Agricultural Credit on the Productivity of Togolese Farmers," International Journal of Agricultural Sciences and Technology (IJAGST), SvedbergOpen, vol. 1(4), November.
    14. Lateef Olalekan Bello & Lloyd James Segun Baiyegunhi & Djana Mignouna & Razack Adeoti & Paul Matin Dontsop-Nguezet & Tahirou Abdoulaye & Victor Manyong & Zoumana Bamba & Bola Amoke Awotide, 2021. "Impact of Youth-in-Agribusiness Program on Employment Creation in Nigeria," Sustainability, MDPI, vol. 13(14), pages 1-20, July.
    15. Shaibu Baanni Azumah & William Adzawla & Augustine Logoti Tiweh, 2015. "Analysing the effect of microenterprise development on rural households` savings in the Tolon district of Ghana: A switching regression approach," Journal of Asian Business Strategy, Asian Economic and Social Society, vol. 5(6), pages 99-108, June.
    16. Hadush, Muuz, 2018. "Impact of improved animal feeding practice on milk production, consumption and animal market participation in Tigrai, Ethiopia," Problems of Agricultural Economics / Zagadnienia Ekonomiki Rolnej 276473, Institute of Agricultural and Food Economics - National Research Institute (IAFE-NRI).
    17. Liqiong Lin & Weizhuo Wang & Christopher Gan & David A. Cohen & Quang T.T Nguyen, 2019. "Rural Credit Constraint and Informal Rural Credit Accessibility in China," Sustainability, MDPI, vol. 11(7), pages 1-20, April.
    18. Asfaw, Solomon & Shiferaw, Bekele & Simtowe, Franklin & Lipper, Leslie, 2012. "Impact of modern agricultural technologies on smallholder welfare: Evidence from Tanzania and Ethiopia," Food Policy, Elsevier, vol. 37(3), pages 283-295.
    19. Anwasia Anthonia Ifeoma & Anselm Anibueze Enete & Ezeibe Adaku Bridget, 2023. "Determinant and Impact of Renewable Energy Utilization on Farm Productivity in South-South Nigeria," Journal of Agriculture and Crops, Academic Research Publishing Group, vol. 9(1), pages 105-113, 01-2023.
    20. Tambo, Justice A. & Wünscher, Tobias, 2016. "Beyond adoption: welfare effects of farmer innovation behavior in Ghana," Discussion Papers 235297, University of Bonn, Center for Development Research (ZEF).

    More about this item

    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:rnd:arjebs:v:11:y:2019:i:1:p:166-180. 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: Muhammad Tayyab (email available below). General contact details of provider: https://ojs.amhinternational.com/index.php/jebs .

    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.