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The Impact of Institutional Credit on Agricultural Production in Pakistan

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  • Iqbal, Muhammad
  • Ahmad, Munir
  • Abbas, Kalbe

Abstract

Agricultural credit plays an important role in enhancing the agricultural productivity in developing countries like Pakistan. The study discusses various indicators of agricultural credit in Pakistan and presents results of estimated production function using institutional credit as one of the explanatory variables. Over the years, increased percentage of agricultural GDP has been disbursed as institutional credit. During the study period disbursement of institutional credit per cropped hectare also depicted an increasing trend in nominal terms. However, it declined in real terms from late 1980’s to early 1990s. Zarai Taraqiati Bank Limited (ZTBL)-- formerly known as Agricultural Development Bank of Pakistan (ADBP), provides the major share of institutional credit. The share of production loans in total loan advanced has been increasing during 1980-81 to 1986-87 and after mid 1990’s. It shows multiple shifts in credit policy from loans for fixed capital to advances for operational capital during the study period. The OLS estimates of the production function revealed that institutional credit affects agricultural production positively. Water availability at the farm gate, labor, and cropping intensity are the other important variables that affect agricultural output positively. However, the shocks like floods, cotton leaf curl virus (CLCV), and drought have caused significant decline in agricultural output during certain years.

Suggested Citation

  • Iqbal, Muhammad & Ahmad, Munir & Abbas, Kalbe, 2003. "The Impact of Institutional Credit on Agricultural Production in Pakistan," MPRA Paper 3673, University Library of Munich, Germany, revised 2003.
  • Handle: RePEc:pra:mprapa:3673
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    References listed on IDEAS

    as
    1. Sarfraz Khan Qureshi & Akhtiar H. Shah, 1992. "A Critical Review of Rural Credit Policy in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 31(4), pages 781-801.
    2. Carter, Michael R., 1989. "The impact of credit on peasant productivity and differentiation in Nicaragua," Journal of Development Economics, Elsevier, vol. 31(1), pages 13-36, July.
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    Cited by:

    1. Muhammad Khalid Bashir & Yasir Mehmood, 2010. "Institutional credit and rice productivity: a case study of District Lahore, Pakistan," China Agricultural Economic Review, Emerald Group Publishing, vol. 2(4), pages 412-419, November.
    2. Muhammad Khalid Bashir & Zulfiqar Ahmad Gill & Sarfraz Hassan, 2009. "Impact of credit disbursed by commercial banks on the productivity of wheat in Faisalabad district," China Agricultural Economic Review, Emerald Group Publishing, vol. 1(3), pages 275-282, May.
    3. Izhar, Ahmad & Tariq, Masood, 2009. "Impact of Institutional Credit on Aggregate Agricultural Production in India during Post Reform Period," MPRA Paper 17075, University Library of Munich, Germany.
    4. Sial, Maqbool Hussain & Awan, Masood Sarwar & Waqas, Muhammad, 2011. "Role of Institutional Credit on Agricultural Production: A Time Series Analysis of Pakistan," MPRA Paper 31815, University Library of Munich, Germany.
    5. Sayeed, Asad. & Abbasi, Zubair Faisal., 2015. "The role of central banks in supporting economic growth and creation of productive employment : the case of Pakistan," ILO Working Papers 994874753402676, International Labour Organization.
    6. Fateh M. Mari & Heman D. Lohano, 2007. "Measuring Production Function and Technical Efficiency of Onion, Tomato, and Chillies Farms in Sindh, Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 46(4), pages 1053-1064.
    7. Odu, O.O. & Okoruwa, V.O., 2013. "Effect of Credit Constraint on Profit of Small Scale Rice-Based Farmers in Niger State, Northwestern Nigeria," 2013 AAAE Fourth International Conference, September 22-25, 2013, Hammamet, Tunisia 161649, African Association of Agricultural Economists (AAAE).
    8. repec:ilo:ilowps:487475 is not listed on IDEAS

    More about this item

    Keywords

    institutional credit; agricultural production; production function;

    JEL classification:

    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture

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