Impact of agricultural credit sources heterogeneity on rice production efficiency in Côte d'Ivoire

Abstract

PurposeThis study examines the impact of agricultural credit on rice farmers' technical efficiency (TE) in Côte d'Ivoire by considering the heterogeneity among credit sources.Design/methodology/approachA multistage sampling technique was used to collect data from 588 randomly sampled rice farmers in seven rice areas of the country. The authors use the endogenous stochastic frontier production (ESFP) model to account for the endogeneity of access to agricultural credit.FindingsOn the one hand, agricultural credit has a significant and positive impact on rice farmers' TE. Rice farmers receiving agricultural credit have an average of 5% increase in their TE, confirming the positive impact of agricultural credit on TE. On the other hand, the study provides evidence that the impact of credit on rice production efficiency differs depending on the source of credit. Borrowing from agricultural cooperatives and paddy rice buyers/processors positively and significantly influences the TE, while borrowing from microfinance institutions (MFIs) negatively and significantly influences the TE. Moreover, borrowing from relatives/friends does not significantly influence TE.Research limitations/implicationsFuture research can further explore the contribution of agricultural credit by including several agricultural productions and using panel data.Originality/valueThe study provides evidence that the impact of agricultural credit on agricultural production efficiency depends on the source of credit. This study contributes to the literature on the impact of agricultural credit and enlightens policymakers in the design of agricultural credit models in developing countries, particularly Côte d'Ivoire.