Abstract
Based on the survey data of 250 farmers from the Multan district of Southern region of Punjab, Pakistan this study aims to empirically examine the determinants of access to agricultural credit. This study used the probit model to analyze the data. The results revealed that formal education, farm size, level of farm mechanization, farm revenue and landholding size positively and significantly influenced access to agricultural credit while the age of the farmer’s, distance, and off- farm income negatively and insignificantly influenced farmer’s accessibility to agricultural credit. The findings of the current study offer a policy guideline to streamline national policy on agricultural finance. This study also recommends that ZaraiTaraqiati Bank (ZTBL) and other Commercial Banks should improve their agricultural credit schemes to fulfil the diversified needs of small farm holders.
Similar content being viewed by others
References
Abdullah, D. Z., Khan, S. A., Jebran, K., & Ali, A. (2015). Agricultural credit in Pakistan: Past trends and future prospects. Journal of Applied Environmental and Biological Sciences, 5(12), 178–188.
Akram, W., & Hussain, Z. (2008). Agricultural credit constraints and borrowing behavior of farmers in rural Punjab. European journal of scientific research, 2(23), 294–304.
Akudugu, M. A., Guo, E., & Dadzie, S. K. (2012). Adoption of modern agricultural production technologies by farm households in Ghana: what factors influence their decisions? Journal of Biology, Agriculture and Healthcare, 3(2)
Amjad, S., & Hasnu, S. (2007). Smallholders’ access to rural credit: Evidence from Pakistan. The Lahore Journal of Economics, 12(2), 1–25.
Ayaz, S., & Hussain, Z. (2011). Impact of institutional credit on production efficiency of farming sector: A case study of District Faisalabad. Pakistan economic and social review, 49(2), 149–162.
Baqir, R. (2019). SBP sets agri loan target at Rs. 1.35tr. DAWN news. https://www.dawn.com/news/1517680. Accessed 28 Nov 2019.
Bashir, M. K., Gill, Z. A., & Hassan, S. (2009). Impact of credit disbursed by commercial banks on the productivity of wheat in Faisalabad district. China Agricultural Economic Review, 1(3), 275–282. https://doi.org/10.1108/17561370910958855.
Bashir, M. K., Mehmood, Y., & Hassan, S. (2010). Impact of agricultural credit on productivity of wheat crop: Evidence from Lahore, Punjab, Pakistan. Pakistan Journal of Agricultural Science, 47(4), 405–409.
Benin, S., Mogues, T., Cudjoe, G., & Randriamamonjy, J. (2012). Public expenditures and agricultural productivity growth in Ghana. Public Expenditures for Agricultural and Rural Development in Africa. (No. 1005-2016-79117).
Byerlee, D., Stevenson, J., & Villoria, N. (2014). Does intensification slow crop land expansion or encourage deforestation? Global Food Security, 3(2), 92–98.
Chandio, A. A., Jiang, Y., & Rehman, A. (2018a). Credit margin of investment in the agricultural sector and credit fungibility: The case of smallholders of district Shikarpur, Sindh. Pakistan. Financial Innovation, 4(1), 27.
Chandio, A. A., Jiang, Y., Wei, F., & Guangshun, X. (2018b). Effects of agricultural credit on wheat productivity of small farms in Sindh, Pakistan: Are short-term loans better? Agricultural Finance Review, 78(5), 592–610.
Chandio, A. A., Jiang, Y., Wei, F., Rehman, A., & Liu, D. (2017). Famers’ access to credit: Does collateral matter or cash flow matter?—Evidence from Sindh, Pakistan. Cogent Economics & Finance, 5(1), 1369383.
Conning, J., & Udry, C. (2005). Rural Financial Markets in Developing Countries. Economic Growth Centre: Yale University, and Centre Discussion Paper (914).
Das, A., Senapati, M., & John, J. (2009). Impact of agricultural credit on agriculture production: An empirical analysis in India. Reserve Bank of India Occasional Papers, 30(2), 75–107.
Denkyirah, E. K., Adu, D. T., Aziz, A. A., Denkyirah, E. K., & Okoffo, E. D. (2016). Analysis of the factors influencing smallholder rice farmers’ access to credit in the upper east region of Ghana. Asian Journal of Agricultural Extension, Economics & Sociology, 10(4), 1–11.
Duniya, K., & Adinah, I. (2015). Probit analysis of cotton farmers’ accessibility to credit in northern guinea savannah of Nigeria. Asian Journal of Agricultural Extension, Economics & Sociology, 4(4), 296–301.
Dzadze, P., Osei, M., Aidoo, R., & Nurah, G. (2012). Factors determining access to formal credit in Ghana: A case study of smallholder farmers in the Abura-Asebu Kwamankese district of central region of Ghana. Journal of Development and Agricultural Economics, 4(14), 416–423.
Freeman, H. A., Ehui, S. K., & Jabbar, M. A. (1998). Credit constraints and smallholder dairy production in the East African highlands: Application of a switching regression model. Agricultural Economics, 19(1–2), 33–44.
GOP. (2016). Economic Survey of Pakistan 2015-16. Agricultural Statistics of Pakistan. Ministry of Food Agriculture and Livestock Division, Islamabad.
Hadley, D. (2006). Patterns in technical efficiency and technical change at the farm-level in England and Wales, 1982–2002. Journal of Agricultural Economics, 57(1), 81–100.
Hananu, B., Abdul-Hanan, A., & Zakaria, H. (2015). Factors influencing agricultural credit demand in Northern Ghana. African Journal of Agricultural Research, 10(7), 645–652.
Hussain, A., & Thapa, G. B. (2012). Smallholders’ access to agricultural credit in Pakistan. Food Security, 4(1), 73–85.
Ibrahim, S. S., & Aliero, H. M. (2012). An analysis of farmers access to formal credit in the rural areas of Nigeria. African Journal of Agricultural Research, 7(47), 6249–6253.
Ijioma, J. C., & Osondu, C. K. (2015). Agricultural credit sources and determinants of credit acquisition by farmers in Idemili Local Government Area of Anambra State. Journal of Agricultural Science and Technology B, 5(1), 34–43.
Imaduddin. (2019). Govt in budget 2019–20 announces special measures for agriculture development. Business recorder. https://www.brecorder.com/2019/06/12/502133/govt-in-budget-2019-20-announces-special-measures-for-agriculture-development. Accessed 18 Aug 2019
Iqbal, M., Ahmad, M., & Abbas, K. (2003a). The impact of institutional credit on agricultural production in Pakistan. The Pakistan Development Review, 42(4), 469–485.
Iqbal, M., Ahmad, M., & Abbas, K. (2003). The impact of institutional credit on agricultural production in Pakistan. The Pakistan Development Review, 42(4), 469–485.
Jacobson, T., & Von Schedvin, E. (2015). Trade credit and the propagation of corporate failure: An empirical analysis. Econometrica, 83(4), 1315–1371.
Jodha, N. (1981). Role of credit in farmers' adjustment against risk in arid and semi-arid tropical areas of India. Economic and Political Weekly, 16(42–43), 1696–1709.
Kouamé, E. B.-H. (2010). Risk, risk aversion and choice of risk management. Strategies by cocoa farmers in western Côte d’Ivoire. In CSAE conference.
Li, X., Gan, C., & Hu, B. (2011). Accessibility to microcredit by Chinese rural households. Journal of Asian Economics, 22(3), 235–246.
Mbam, B., & Edeh, H. (2011). Determinants of farm productivity among smallholder rice farmers in Anambra State, Nigeria. Journal of Animal and Plant Sciences (JAPS), 9(3), 1187–1191.
Mellor, J. W. (1966). The economics of agricultural development. The economics of agricultural development.
Mesfin, W., Fufa, B., & Haji, J. (2011). Pattern, trend and determinants of crop diversification: Empirical evidence from smallholders in eastern Ethiopia. Journal of Economics and Sustainable Development, 2(8), 78–89.
Ministry of Finance. (2017). Pakistan Economic Survey 2016–17, Ministry of Finance, Finance Division. Government of Pakistan, Islamabad. https://www.finance.gov.pk/survey_1617.html. Accessed 18 Sept 2019.
Minten, B., & Barrett, C. B. (2008). Agricultural technology, productivity, and poverty in Madagascar. World Development, 36(5), 797–822.
MoF. (2019). Chapter 02, Agricultrue. Pakistan Economic Survey 2018–19. https://finance.gov.pk/survey/chapters_18/02-Agriculture.pdf. Accessed 18 Sept 2019
Mundial, B. (2008). World Development Report. Agriculture for Development. Washington, DC: World Bank.
Nouman, M., Siddiqi, M., Asim, S., & Hussain, Z. (2013). Impact of socio-economic characteristics of farmers on access to agricultural credit. Sarhad Journal of Agriculture, 29(3), 469–476.
Pandey, V. L., Dev, S. M., & Jayachandran, U. (2016). Impact of agricultural interventions on the nutritional status in South Asia: A review. Food Policy, 62, 28–40.
PBS. (2019). Agriculture Statistics. Pakistan Bureau of Statistics. https://www.pbs.gov.pk/content/agriculture-statistics.
Quoc Duy, V. (2011). Factors Affecting on Access to Formal Credit of Households in the Mekong Delta, Vietnam. Factors Affecting on Access to Formal Credit of Households in the Mekong Delta, Vietnam (December, 15 2011).
Rehima, M., Belay, K., Dawit, A., & Rashid, S. (2013). Factors affecting farmers’ crops diversification: Evidence from SNNPR, Ethiopia. International Journal of Agricultural Sciences, 3(6), 558–565.
Rehman, A., Chandio, A. A., Hussain, I., & Jingdong, L. (2019). Fertilizer consumption, water availability and credit distribution: Major factors affecting agricultural productivity in Pakistan. Journal of the Saudi Society of Agricultural Sciences, 18(3), 269–274.
Reyes, A., Lensink, R., Kuyvenhoven, A., & Moll, H. (2012). Impact of access to credit on farm productivity of fruit and vegetable growers in Chile. (1007-2016-79549).
Saboor, A., Hussain, M., & Munir, M. (2009). Impact of micro credit in alleviating poverty: An Insight from rural Rawalpindi, Pakistan. Pakistan Journal of Life and Society Sciences, 7(1), 90–97.
Sanusi, W., & Adedeji, I. (2010). A probit analysis of accessibility of small scale farmers to formal source of credit in Ogbomoso zone, Oyo state. Nigeria. Agricultural Tropica et Subtropica, 3(1), 49–53.
Saqib, S. E., Ahmad, M. M., & Panezai, S. (2016). Landholding size and farmers’ access to credit and its utilisation in Pakistan. Development in Practice, 26(8), 1060–1071.
Saqib, S. E., Kuwornu, J. K., Panezia, S., & Ali, U. (2018). Factors determining subsistence farmers' access to agricultural credit in flood-prone areas of Pakistan. Kasetsart Journal of Social Sciences, 39(2), 262–268.
Saqib Shahab, E. (2018). Subsistence farmers’ access to agricultural credit and its adequacy: Some empirical evidences from Pakistan. International Journal of Social Economics, 45(4), 644–660.
Schultz, T. W. (1980). Nobel lecture: The economics of being poor. Journal of political Economy, 88(4), 639–651.
Sial, M. H., Awan, M. S., & Waqas, M. (2011). Role of institutional credit on agricultural production: A time series analysis of Pakistan. International Journal of Economics and Finance, 3(2), 126–132.
Statistics, P. B. O. (2017). Pakistan Bureau of Statistics | 6th Population and Housing Census. Pakistan Bureau of Statistics. https://www.pbs.gov.pk/content/population-census.
Stein, H., Maganga, F. P., Odgaard, R., Askew, K., & Cunningham, S. (2016). The formal divide: Customary rights and the allocation of credit to agriculture in Tanzania. The Journal of Development Studies, 52(9), 1306–1319.
Ullah, R. 2014. Production risk management and its impact at farm level: the case of Pakistan. A Ph. D thesis.
Vogt, D. (1978). Broadening to access credit. Development Digest, 16(3), 3–5.
Webb, P., & Kennedy, E. (2014). Impacts of agriculture on nutrition: Nature of the evidence and research gaps. Food and Nutrition Bulletin, 35(1), 126–132.
Winter-Nelson, A., & Temu, A. A. (2005). Liquidity constraints, access to credit and pro-poor growth in rural Tanzania. Journal of International Development, 17(7), 867–882.
Zada, M., Shah, S. J., Yukun, C., Rauf, T., Khan, N., & Shah, S. A. A. (2019). Impact of small-to-medium size forest enterprises on rural livelihood: Evidence from Khyber-Pakhtunkhwa, Pakistan. Sustainability, 11(10), 2989.
Zada, M., C. Yukun, and S. Zada. 2019 Effect of financial management practices on the development of small-to-medium size forest enterprises: insight from Pakistan. GeoJournal: 1–16.
Zuberi, H. A. (1989). Production function, institutional credit and agricultural development in Pakistan. The Pakistan Development Review, 28(1), 43–55.
Author information
Authors and Affiliations
Corresponding author
Ethics declarations
Conflict of interest
The researcher ensured complete compliance with ethical considerations. None of the respondents was forced to provide data, and their identification was not shown in the research, and the authors declare that they have no conflict of interest.
Additional information
Publisher's Note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Rights and permissions
Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.
About this article
Cite this article
Perveen, F., Shang, J., Zada, M. et al. Identifying the determinants of access to agricultural credit in Southern Punjab of Pakistan. GeoJournal 86, 2767–2776 (2021). https://doi.org/10.1007/s10708-020-10227-y
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10708-020-10227-y