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

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  • Mekdim D. Regassa
  • Mohammed B. Degnet
  • Mequanint B. Melesse
Abstract
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 significatifs sur l'adoption et l'intensité d'utilisation des engrais chimiques. Cependant, d'importantes hétérogénéités sont observées. Le crédit obtenu auprès de sources formelles est plus important pour l'intensité d'utilisation que pour la décision d'adopter des engrais chimiques. Le crédit contracté dans le but principal de financer les intrants agricoles est plus susceptible de promouvoir l'adoption d'engrais chimiques que le crédit contracté général. En outre, les effets de crédit signalés sont plus importants lorsqu'ils sont estimés par rapport à l'échantillon de non‐utilisateurs de crédit limité par rapport à l'ensemble de l'échantillon de non‐utilisateurs de crédit. Les résultats restent robustes à plusieurs analyses de sensibilité. Nos résultats ont des implications utiles pour la conception, la promotion et le ciblage des services de crédit afin de tirer parti de leur effet sur l'adoption des technologies agricoles. Remerciements : Nous remercions l'Agence centrale de statistique (CSA) d'Éthiopie et l'Institut international de recherche sur les politiques alimentaires (IFPRI) d'avoir élargi l'accès aux données. Nous remercions également l'éditeur et deux relecteurs anonymes pour leurs commentaires constructifs et leurs suggestions qui ont amélioré le manuscrit. Toutes les erreurs sont de la seule responsabilité des auteurs.

Suggested Citation

  • Mekdim D. Regassa & Mohammed B. Degnet & Mequanint B. Melesse, 2023. "Access to credit and heterogeneous effects on agricultural technology adoption: Evidence from large rural surveys in Ethiopia," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 71(2), pages 231-253, June.
  • Handle: RePEc:bla:canjag:v:71:y:2023:i:2:p:231-253
    DOI: 10.1111/cjag.12329
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