Access to credit and heterogeneous effects on agricultural technology adoption: Evidence from large rural surveys in Ethiopia

Modern agricultural technologies hold huge potential for increasing productivity and reducing poverty in developing countries. However, adoption levels of these technologies have remained disappointingly low in Africa. This paper analyzes the effect of access to credit on the likelihood of adoption and use intensity of chemical fertilizers using data from large rural surveys in Ethiopia. Using a heteroscedasticity‐based identification strategy to address the endogenous nature of access to credit, we find that access to credit has significant positive effects on adoption and intensity of use of chemical fertilizers. However, important heterogeneities are observed. Credit obtained from formal sources is more important for the intensity of use than for the decision to adopt chemical fertilizers. Credit taken with the primary purpose of financing agricultural inputs is more likely to promote adoption of chemical fertilizers than credit taken per se. Furthermore, reported credit effects are larger when estimated against the sample of credit‐constrained non‐users as compared with the pool of the whole sample of credit non‐users. The results remain robust to several sensitivity analyses. Our results yield useful implications for the design, promotion, and targeting of credit services to leverage their effect on adoption of agricultural technologies. Les technologies agricoles modernes recèlent un énorme potentiel pour accroître la productivité et réduire la pauvreté dans les pays en développement. Cependant, les niveaux d'adoption de ces technologies sont restés décevants en Afrique. Cet article analyse l'effet de l'accès au crédit sur la probabilité d'adoption et l'intensité d'utilisation des engrais chimiques en utilisant les données de grandes enquêtes rurales en Éthiopie. En utilisant une stratégie d'identification basée sur l'hétéroscédasticité pour aborder la nature endogène de l'accès au crédit, nous constatons que l'accès au crédit a des effets positifs significati(This abstract was borrowed from another version of this item.)