Causes and Implications of Credit Rationing in Rural Ethiopia : The Importance of Spatial Variation
This paper uses Ethiopian data to explore credit rationing in semi-formal credit markets and its effects on farmers' resource allocation and crop productivity. Credit rationing -- both voluntarily and involuntarily -- is found to be widespread...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2012/06/16391502/causes-implications-credit-rationing-rural-ethiopia-importance-spatial-variation http://hdl.handle.net/10986/9327 |
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okr-10986-93272021-04-23T14:02:45Z Causes and Implications of Credit Rationing in Rural Ethiopia : The Importance of Spatial Variation Ali, Daniel Ayalew Deininger, Klaus ACCESS TO CAPITAL ACCESS TO CREDIT ACCESS TO FORMAL CREDIT ACCESS TO LOANS ADVERSE SELECTION AGRICULTURAL ACTIVITIES AGRICULTURAL ECONOMICS AGRICULTURE ALLOCATION OF CREDIT AMOUNT OF CREDIT ASSETS BORROWER BORROWING BORROWING CONSTRAINTS CAPITAL CONSTRAINTS CAPITAL MARKET CAPITAL MARKETS COLLATERAL COLLATERAL REQUIREMENT COLLATERAL REQUIREMENTS COMPETITIVE MARKETS CONSUMER DURABLES CONSUMPTION SMOOTHING COOP COOPERATIVES CREDIT ACCESS CREDIT ASSOCIATIONS CREDIT AVAILABILITY CREDIT CONSTRAINT CREDIT CONSTRAINTS CREDIT MARKET CREDIT MARKET ACCESS CREDIT MARKETS CREDIT RATIONING CREDIT UNIONS CREDITS DEMAND FOR CREDIT DEPENDENT DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DEVELOPMENT STRATEGY DISEQUILIBRIUM ECONOMETRIC ANALYSIS ECONOMIC CRITERIA ECONOMIC DEVELOPMENT ECONOMIC OPPORTUNITIES EMPLOYMENT OPPORTUNITIES ENDOWMENTS EQUALITY EQUILIBRIUM CREDIT EQUILIBRIUM CREDIT RATIONING EXCESS DEMAND EXCHANGE RATE EXCLUSION FARMER FARMERS FINANCIAL MARKETS FORMAL CREDIT FORMAL FINANCE FORMAL FINANCIAL INSTITUTIONS FORMAL LOAN HOLDING HOUSEHOLD WELFARE HOUSEHOLDS INCENTIVE EFFECTS INCOME INDEBTED INEFFICIENCY INFORMAL CREDIT INFORMAL LOANS INFORMATIONAL ASYMMETRIES INSTRUMENT INSURANCE INTEREST RATE INTEREST RATES INTERNATIONAL BANK INVESTMENT OPPORTUNITIES LABOR MARKETS LACK OF ACCESS LACK OF COLLATERAL LAND ADMINISTRATION LAND OWNERSHIP LENDERS LIQUIDITY LOAN LOAN AMOUNT LOAN APPLICANTS LOAN APPLICATION LOAN APPLICATIONS LOAN REQUEST LOAN SIZE LOAN SIZES LOAN TERMS LOANABLE FUNDS MAXIMUM LIKELIHOOD ESTIMATION MAXIMUM LIKELIHOOD METHOD MICRO-FINANCE MICRO-FINANCE INSTITUTIONS MICROFINANCE MICROFINANCE INSTITUTIONS MISSING MARKETS MONEYLENDERS MORAL HAZARD OUTREACH PERMANENT INCOME PORTFOLIO POSITIVE COEFFICIENT POSSESSION POTENTIAL BORROWERS PRODUCTIVITY PROFITABILITY PROVISION OF CREDIT REGRESSION MODELS REPAYMENT RETURNS RURAL CREDIT RURAL CREDIT MARKETS RURAL FINANCIAL MARKETS SAVINGS SMALL FARM SMALL LOANS SMALLHOLDER SMALLHOLDER FARMERS SMALLHOLDERS SOCIAL NETWORKS SOURCE OF CREDIT STOCKS TERMS OF LOAN TRANSACTION TRANSACTION COST TRANSACTION COSTS TRANSITION COUNTRIES UNIONS USE OF COLLATERAL VALUE OF OUTPUT VARIABLE INPUTS VILLAGE VILLAGES WARRANTS WEALTH WEALTH EFFECTS WORKING CAPITAL This paper uses Ethiopian data to explore credit rationing in semi-formal credit markets and its effects on farmers' resource allocation and crop productivity. Credit rationing -- both voluntarily and involuntarily -- is found to be widespread in the sampled rural villages, largely because of risk-related factors. Political and social networks emerge as key determinants of access to credit among smallholder, peasant farmers. Significant regional variation emerges as well. In high-potential, surplus producing areas where credit is largely used for agricultural production, eliminating credit constraints is estimated to increase productivity by roughly 11 percentage points. By contrast, in low-productivity, drought prone areas where loans were rarely used to acquire inputs for crop production, the authors find no relationship between credit rationing and agricultural productivity. To be effective, efforts to improve agricultural productivity not only need to increase credit supply, but also explore the reasons for credit rationing and the availability of productive opportunities. 2012-06-29T19:21:35Z 2012-06-29T19:21:35Z 2012-06 http://documents.worldbank.org/curated/en/2012/06/16391502/causes-implications-credit-rationing-rural-ethiopia-importance-spatial-variation http://hdl.handle.net/10986/9327 English en_US Policy Research Working Paper; No. 6096 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Africa Ethiopia |
| repository_type |
Digital Repository |
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Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ACCESS TO CAPITAL ACCESS TO CREDIT ACCESS TO FORMAL CREDIT ACCESS TO LOANS ADVERSE SELECTION AGRICULTURAL ACTIVITIES AGRICULTURAL ECONOMICS AGRICULTURE ALLOCATION OF CREDIT AMOUNT OF CREDIT ASSETS BORROWER BORROWING BORROWING CONSTRAINTS CAPITAL CONSTRAINTS CAPITAL MARKET CAPITAL MARKETS COLLATERAL COLLATERAL REQUIREMENT COLLATERAL REQUIREMENTS COMPETITIVE MARKETS CONSUMER DURABLES CONSUMPTION SMOOTHING COOP COOPERATIVES CREDIT ACCESS CREDIT ASSOCIATIONS CREDIT AVAILABILITY CREDIT CONSTRAINT CREDIT CONSTRAINTS CREDIT MARKET CREDIT MARKET ACCESS CREDIT MARKETS CREDIT RATIONING CREDIT UNIONS CREDITS DEMAND FOR CREDIT DEPENDENT DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DEVELOPMENT STRATEGY DISEQUILIBRIUM ECONOMETRIC ANALYSIS ECONOMIC CRITERIA ECONOMIC DEVELOPMENT ECONOMIC OPPORTUNITIES EMPLOYMENT OPPORTUNITIES ENDOWMENTS EQUALITY EQUILIBRIUM CREDIT EQUILIBRIUM CREDIT RATIONING EXCESS DEMAND EXCHANGE RATE EXCLUSION FARMER FARMERS FINANCIAL MARKETS FORMAL CREDIT FORMAL FINANCE FORMAL FINANCIAL INSTITUTIONS FORMAL LOAN HOLDING HOUSEHOLD WELFARE HOUSEHOLDS INCENTIVE EFFECTS INCOME INDEBTED INEFFICIENCY INFORMAL CREDIT INFORMAL LOANS INFORMATIONAL ASYMMETRIES INSTRUMENT INSURANCE INTEREST RATE INTEREST RATES INTERNATIONAL BANK INVESTMENT OPPORTUNITIES LABOR MARKETS LACK OF ACCESS LACK OF COLLATERAL LAND ADMINISTRATION LAND OWNERSHIP LENDERS LIQUIDITY LOAN LOAN AMOUNT LOAN APPLICANTS LOAN APPLICATION LOAN APPLICATIONS LOAN REQUEST LOAN SIZE LOAN SIZES LOAN TERMS LOANABLE FUNDS MAXIMUM LIKELIHOOD ESTIMATION MAXIMUM LIKELIHOOD METHOD MICRO-FINANCE MICRO-FINANCE INSTITUTIONS MICROFINANCE MICROFINANCE INSTITUTIONS MISSING MARKETS MONEYLENDERS MORAL HAZARD OUTREACH PERMANENT INCOME PORTFOLIO POSITIVE COEFFICIENT POSSESSION POTENTIAL BORROWERS PRODUCTIVITY PROFITABILITY PROVISION OF CREDIT REGRESSION MODELS REPAYMENT RETURNS RURAL CREDIT RURAL CREDIT MARKETS RURAL FINANCIAL MARKETS SAVINGS SMALL FARM SMALL LOANS SMALLHOLDER SMALLHOLDER FARMERS SMALLHOLDERS SOCIAL NETWORKS SOURCE OF CREDIT STOCKS TERMS OF LOAN TRANSACTION TRANSACTION COST TRANSACTION COSTS TRANSITION COUNTRIES UNIONS USE OF COLLATERAL VALUE OF OUTPUT VARIABLE INPUTS VILLAGE VILLAGES WARRANTS WEALTH WEALTH EFFECTS WORKING CAPITAL |
| spellingShingle |
ACCESS TO CAPITAL ACCESS TO CREDIT ACCESS TO FORMAL CREDIT ACCESS TO LOANS ADVERSE SELECTION AGRICULTURAL ACTIVITIES AGRICULTURAL ECONOMICS AGRICULTURE ALLOCATION OF CREDIT AMOUNT OF CREDIT ASSETS BORROWER BORROWING BORROWING CONSTRAINTS CAPITAL CONSTRAINTS CAPITAL MARKET CAPITAL MARKETS COLLATERAL COLLATERAL REQUIREMENT COLLATERAL REQUIREMENTS COMPETITIVE MARKETS CONSUMER DURABLES CONSUMPTION SMOOTHING COOP COOPERATIVES CREDIT ACCESS CREDIT ASSOCIATIONS CREDIT AVAILABILITY CREDIT CONSTRAINT CREDIT CONSTRAINTS CREDIT MARKET CREDIT MARKET ACCESS CREDIT MARKETS CREDIT RATIONING CREDIT UNIONS CREDITS DEMAND FOR CREDIT DEPENDENT DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DEVELOPMENT STRATEGY DISEQUILIBRIUM ECONOMETRIC ANALYSIS ECONOMIC CRITERIA ECONOMIC DEVELOPMENT ECONOMIC OPPORTUNITIES EMPLOYMENT OPPORTUNITIES ENDOWMENTS EQUALITY EQUILIBRIUM CREDIT EQUILIBRIUM CREDIT RATIONING EXCESS DEMAND EXCHANGE RATE EXCLUSION FARMER FARMERS FINANCIAL MARKETS FORMAL CREDIT FORMAL FINANCE FORMAL FINANCIAL INSTITUTIONS FORMAL LOAN HOLDING HOUSEHOLD WELFARE HOUSEHOLDS INCENTIVE EFFECTS INCOME INDEBTED INEFFICIENCY INFORMAL CREDIT INFORMAL LOANS INFORMATIONAL ASYMMETRIES INSTRUMENT INSURANCE INTEREST RATE INTEREST RATES INTERNATIONAL BANK INVESTMENT OPPORTUNITIES LABOR MARKETS LACK OF ACCESS LACK OF COLLATERAL LAND ADMINISTRATION LAND OWNERSHIP LENDERS LIQUIDITY LOAN LOAN AMOUNT LOAN APPLICANTS LOAN APPLICATION LOAN APPLICATIONS LOAN REQUEST LOAN SIZE LOAN SIZES LOAN TERMS LOANABLE FUNDS MAXIMUM LIKELIHOOD ESTIMATION MAXIMUM LIKELIHOOD METHOD MICRO-FINANCE MICRO-FINANCE INSTITUTIONS MICROFINANCE MICROFINANCE INSTITUTIONS MISSING MARKETS MONEYLENDERS MORAL HAZARD OUTREACH PERMANENT INCOME PORTFOLIO POSITIVE COEFFICIENT POSSESSION POTENTIAL BORROWERS PRODUCTIVITY PROFITABILITY PROVISION OF CREDIT REGRESSION MODELS REPAYMENT RETURNS RURAL CREDIT RURAL CREDIT MARKETS RURAL FINANCIAL MARKETS SAVINGS SMALL FARM SMALL LOANS SMALLHOLDER SMALLHOLDER FARMERS SMALLHOLDERS SOCIAL NETWORKS SOURCE OF CREDIT STOCKS TERMS OF LOAN TRANSACTION TRANSACTION COST TRANSACTION COSTS TRANSITION COUNTRIES UNIONS USE OF COLLATERAL VALUE OF OUTPUT VARIABLE INPUTS VILLAGE VILLAGES WARRANTS WEALTH WEALTH EFFECTS WORKING CAPITAL Ali, Daniel Ayalew Deininger, Klaus Causes and Implications of Credit Rationing in Rural Ethiopia : The Importance of Spatial Variation |
| geographic_facet |
Africa Ethiopia |
| relation |
Policy Research Working Paper; No. 6096 |
| description |
This paper uses Ethiopian data to
explore credit rationing in semi-formal credit markets and
its effects on farmers' resource allocation and crop
productivity. Credit rationing -- both voluntarily and
involuntarily -- is found to be widespread in the sampled
rural villages, largely because of risk-related factors.
Political and social networks emerge as key determinants of
access to credit among smallholder, peasant farmers.
Significant regional variation emerges as well. In
high-potential, surplus producing areas where credit is
largely used for agricultural production, eliminating credit
constraints is estimated to increase productivity by roughly
11 percentage points. By contrast, in low-productivity,
drought prone areas where loans were rarely used to acquire
inputs for crop production, the authors find no relationship
between credit rationing and agricultural productivity. To
be effective, efforts to improve agricultural productivity
not only need to increase credit supply, but also explore
the reasons for credit rationing and the availability of
productive opportunities. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Ali, Daniel Ayalew Deininger, Klaus |
| author_facet |
Ali, Daniel Ayalew Deininger, Klaus |
| author_sort |
Ali, Daniel Ayalew |
| title |
Causes and Implications of Credit Rationing in Rural Ethiopia : The Importance of Spatial Variation |
| title_short |
Causes and Implications of Credit Rationing in Rural Ethiopia : The Importance of Spatial Variation |
| title_full |
Causes and Implications of Credit Rationing in Rural Ethiopia : The Importance of Spatial Variation |
| title_fullStr |
Causes and Implications of Credit Rationing in Rural Ethiopia : The Importance of Spatial Variation |
| title_full_unstemmed |
Causes and Implications of Credit Rationing in Rural Ethiopia : The Importance of Spatial Variation |
| title_sort |
causes and implications of credit rationing in rural ethiopia : the importance of spatial variation |
| publisher |
World Bank, Washington, DC |
| publishDate |
2012 |
| url |
http://documents.worldbank.org/curated/en/2012/06/16391502/causes-implications-credit-rationing-rural-ethiopia-importance-spatial-variation http://hdl.handle.net/10986/9327 |
| _version_ |
1764409148059942912 |