The European Journal of Development Research

, Volume 28, Issue 5, pp 826–846 | Cite as

Fungibility of Smallholder Agricultural Credit: Empirical Evidence from Pakistan

  • Abid Hussain
  • Gopal Bahadur Thapa
Original Article


This study attempts to estimate credit fungibility (CF) and analyses its factors, using the primary data of 208 smallholders from Punjab province of Pakistan. Findings revealed that smallholders used a significant proportion of obtained credit on non-agricultural purposes. Among three groups of smallholders compared, that is, lower smallholders (⩽1.0 acre), middle smallholders (1.01–2.50 acres) and upper smallholders (2.51–5.00 acres), lower smallholders used nearly one-third of their obtained credit for non-agricultural purposes in spite of their highest dependency on credit to carry out their agricultural activities. In contrast, the other two groups of smallholders, whose dependency on credit was relatively low, had used a comparatively lower proportion of the credit for non-agricultural activities. The study also found that non-fixed assets and landholding size are the key factors of CF. Other factors such as non-farm income, household size, repayments of old loans, illiteracy and credit source also affected CF significantly, but with notable variations across the groups.


credit fungibility smallholders agricultural credit food security Pakistan 


Cette étude tente d’estimer la fongibilité du crédit (FC) et d’en analyser les facteurs, en utilisant les données primaires de 208 petits exploitants de la province du Pendjab au Pakistan. Les résultats ont révélé que les petits exploitants utilisent une part importante du crédit obtenu à des fins non-agricoles. Parmi les trois groupes de petits exploitants comparés, c’est-à-dire les petits exploitants inférieurs (⩽0,40 hectare), moyens (de 0,41 à 1,00 hectares) et supérieurs (de 1,01 à 2,0 hectares), les petits exploitants inférieurs ont utilisé près d’un tiers de leur crédit à des fins non-agricoles en dépit de leur plus forte dépendance sur crédit pour mener à bien leurs activités agricoles. Au contraire, les deux autres groupes de petits exploitants, dont la dépendance sur le crédit était relativement faible, ont utilisé une proportion du crédit relativement plus petite pour des activités non-agricoles. L’étude a également révélé que les actifs non-immobilisés et la taille des exploitations sont les facteurs clés de la fongibilité du crédit. D’autres facteurs tels que le revenu non agricole, la taille du ménage, les remboursements d’anciens prêts, l’analphabétisme et la source du crédit affectent égalementla fongibilité du crédit de manière significative, mais avec des variations notables entre les groupes.



The authors would like to appreciate Higher Education Commission of Pakistan for providing funding support for this study. Immense cooperation was extended by smallholders, local contact persons, namely, Masood Tahir, Zahid Hussain Meo and Mehar Sarfraz Khan, Chaudhry Tanvir Talib and officials of the District Revenue Office and financial institutions officials during the entire period of field survey. The authors extend their sincere thanks to all of them.


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Copyright information

© European Association of Development Research and Training Institutes (EADI) 2016

Authors and Affiliations

  • Abid Hussain
    • 1
  • Gopal Bahadur Thapa
    • 2
  1. 1.International Centre for Integrated Mountain Development (ICIMOD)KathmanduNepal
  2. 2.School of Environment, Resources and Development, Asian Institute of TechnologyBangkokThailand

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