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Micro-lending for small farmers in Bangladesh

Author

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  • Rashid, Shahidur
  • Sharma, Manohar
  • Zeller, Manfred

Abstract

It has been long hypothesized that lack of access to credit is the main reason why, despite higher profitability of High Yielding Varieties (HYVs), farmers in developing countries continue to allocate a portion of their land to traditional crop varieties. The empirical testing of this hypothesis has generated a large body of literature with differing conclusions. This paper re-examines the issue in the context of a specially designed group-based lending program for small farmers in Bangladesh, who neither have access to formal sources of credit nor do they qualify to become members of other micro-credit organizations. Two measures of access to credit, credit limit and amount borrowed at a given point in time, are used to analyze the determinants of farm households' land allocation decision. Under a variety of model specifications, formulated within Heckman's two-step method, the results show that credit limits from the lending programs and informal sources are significant determinants of small farmers' decision to cultivate HYV. Authors' abstract.

Suggested Citation

  • Rashid, Shahidur & Sharma, Manohar & Zeller, Manfred, 2002. "Micro-lending for small farmers in Bangladesh," MSSD discussion papers 45, International Food Policy Research Institute (IFPRI).
  • Handle: RePEc:fpr:mssddp:45
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    References listed on IDEAS

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    1. Awudu Abdulai & Christopher Delgado, 2000. "An Empirical Investigation of Short- and Long-run Agricultural Wage Formation in Ghana," Oxford Development Studies, Taylor & Francis Journals, vol. 28(2), pages 169-185.
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    Cited by:

    1. Dorosh, Paul A. & Shahabuddin, Quazi, 2002. "Rice price stabilization in Bangladesh," MSSD discussion papers 46, International Food Policy Research Institute (IFPRI).
    2. Nicholas Minot & Lisa Daniels, 2005. "Impact of global cotton markets on rural poverty in Benin," Agricultural Economics, International Association of Agricultural Economists, vol. 33(s3), pages 453-466, November.
    3. Shahabuddin, Quazi & Dorosh, Paul A., 2002. "Comparative advantage in Bangladesh crop production," MTID discussion papers 47, International Food Policy Research Institute (IFPRI).
    4. Gulati, Ashok & Narayanan, Sudha, 2002. "Rice trade liberalization and poverty," MTID discussion papers 51, International Food Policy Research Institute (IFPRI).
    5. Shahidur Rashid, 2004. "Spatial Integration of Maize Markets in Post-liberalised Uganda," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 13(1), pages 102-133, March.
    6. Delgado, Christopher L. & Rosegrant, Mark W. & Wada, Nikolas & Meijer, Siet & Ahmed, Mahfuzuddin, 2002. "Fish as food," MTID discussion papers 52, International Food Policy Research Institute (IFPRI).
      • Delgado, Christopher L. & Rosegrant, Mark W. & Wada, Nikolas & Meijer, Siet & Ahmed, Mahfuzuddin, 2002. "Fish as food," MSSD discussion papers 52, International Food Policy Research Institute (IFPRI).

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