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Choice of Income Generating Activities by Nepalese Farmers

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  • Gupta, Vivek
  • Bhandari, Basu D.
  • Gautam, Tej K.

Abstract

Nepal is predominantly an agricultural country. More than 35% of its GDP depends on agriculture. About 65% of Nepalese people rely agriculture for their livelihood. Agricultural credit plays a major role in agricultural development. Different sources are available in the agricultural credit market in Nepal. Formal sources include agricultural development bank, farmers’ cooperatives, and other financial institutions while informal sources include borrowing from farmers group, women group, and money lender individual (mostly relatives). Several factors might play a role in selecting different credit sources : types of agricultural commodities, buying different operating inputs (machinery, seeds, and fertilizers), buying fixed inputs (machinery and equipment), interest rate, and reimbursement plan. In this paper, we want to determine which source is the most popular among the farmers of Nepal and explain why that particular source is a choice for farmers. We use Nepalese agricultural census data for the fiscal year 2011/12 and multinomial logit model for this analysis. The result of this study will explain the factors affecting the choice of agricultural credit and most popular credit sources in Nepal and come up with some policy recommendations. This would enrich literature in explaining the choice of agricultural credit sources in other developing countries like Nepal.

Suggested Citation

  • Gupta, Vivek & Bhandari, Basu D. & Gautam, Tej K., 2016. "Choice of Income Generating Activities by Nepalese Farmers," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 230131, Southern Agricultural Economics Association.
  • Handle: RePEc:ags:saea16:230131
    DOI: 10.22004/ag.econ.230131
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    File URL: http://ageconsearch.umn.edu/record/230131/files/Choice%20of%20Agricultural%20Credit%20Sources%20by%20Nepalese%20%20Farmers.pdf
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    References listed on IDEAS

    as
    1. Boucher, Stephen R. & Guirkinger, Catherine, 2007. "AJAE Appendix: Risk, Wealth and Sectoral Choice in Rural Credit Markets," American Journal of Agricultural Economics APPENDICES, Agricultural and Applied Economics Association, vol. 89(4), pages 1-4, November.
    2. Mansuri, Ghazala, 2007. "Credit layering in informal financial markets," Journal of Development Economics, Elsevier, vol. 84(2), pages 715-730, November.
    3. Braverman, Avishay & Stiglitz, Joseph E, 1982. "Sharecropping and the Interlinking of Agrarian Markets," American Economic Review, American Economic Association, vol. 72(4), pages 695-715, September.
    4. Guirkinger, Catherine, 2008. "Understanding the Coexistence of Formal and Informal Credit Markets in Piura, Peru," World Development, Elsevier, vol. 36(8), pages 1436-1452, August.
    5. Basu, Santonu, 1997. "Why institutional credit agencies are reluctant to lend to the rural poor: A theoretical analysis of the Indian rural credit market," World Development, Elsevier, vol. 25(2), pages 267-280, February.
    6. 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.
    7. Ghate, P. B., 1992. "Interaction between the formal and informal financial sectors: The Asian experience," World Development, Elsevier, vol. 20(6), pages 859-872, June.
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    Keywords

    Agricultural and Food Policy; Community/Rural/Urban Development;

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