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Does Lack of Access to Formal Credit Constrain Agricultural Production? Evidence from the Land Tenancy Market in Rural India
Author(s) -
Kochar Anjini
Publication year - 1997
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1244417
Subject(s) - leasehold estate , renting , market access , subsidy , business , productivity , production (economics) , agricultural productivity , government (linguistics) , empirical evidence , agriculture , bond market , agricultural economics , economics , finance , economic growth , market economy , microeconomics , linguistics , philosophy , epistemology , political science , law , ecology , biology
While it is commonly believed that lack of access to government‐subsidized “formal” credit underlies observed differences in farm productivity in rural India, there is little empirical evidence on this issue. In this paper I address this issue by examining whether households use the farm land rental market to equilibrate their access to formal credit, as they are known to do in the case of other imperfectly marketable inputs. This research reveals, however, that the advantage formal borrowers enjoy in the tenancy market does not reflect their access to formal credit per se, but their greater ownership of inputs such as irrigated land.