Credit Constraints, Agricultural Productivity, and Rural Nonfarm Participation : Evidence from Rwanda
Although the potentially negative impacts of credit constraints on economic development have long been discussed conceptually, empirical evidence for Africa remains limited. This study uses a direct elicitation approach for a national sample of Rwandan rural households to assess empirically the extent and nature of credit rationing in the semi-formal sector and its impact using an endogenous sample separation between credit-constrained and unconstrained households. Being credit constrained reduces the likelihood of participating in off-farm self-employment activities by about 6.3 percent while making participation in low-return farm wage labor more likely. Even within agriculture, elimination of all types of credit constraints in the semi-formal sector could increase output by some 17 percent. Two suggestions for policy emerge from the findings. First, the estimates suggest that access to information (education, listening to the radio, and membership in a farm cooperative) has a major impact on reducing the incidence of credit constraints in the semi-formal credit sector. Expanding access to information in rural areas thus seems to be one of the most promising strategies to improve credit access in the short term. Second, making it easy to identify land owners and transfer land could also significantly reduce transaction costs associated with credit access.
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dig-okr-1098617305 |
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koha |
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Banco Mundial |
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DSpace |
| country |
Estados Unidos |
| countrycode |
US |
| component |
Bibliográfico |
| access |
En linea |
| databasecode |
dig-okr |
| tag |
biblioteca |
| region |
America del Norte |
| libraryname |
Biblioteca del Banco Mundial |
| language |
English en_US |
| topic |
ACCESS TO CAPITAL ACCESS TO CREDIT ACCESS TO INFORMATION ADVERSE SELECTION AGRICULTURAL COMMODITIES AGRICULTURAL FINANCE AGRICULTURAL PRACTICES AGRICULTURE AMOUNT OF LOAN ASSET OWNERSHIP ASSETS BANK ACCOUNT BANK LOAN BANK POLICY BORROWING CONSTRAINTS CAPITAL MARKET COLLATERAL FOR LOANS COLLATERAL REQUIREMENTS COLLATERAL RISK COMPARATIVE ADVANTAGES CONSUMER DURABLES CREDIT ACCESS CREDIT CONSTRAINT CREDIT CONSTRAINTS CREDIT MARKET CREDIT MARKETS CREDIT RATIONING CREDIT UNIONS DEMAND FOR CREDIT DEMAND-SIDE FACTORS DEPENDENT DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISEQUILIBRIUM DURABLE DURABLE ASSETS ECONOMETRIC ANALYSIS ECONOMETRIC EVIDENCE ECONOMIC DEVELOPMENT ECONOMIC OUTCOMES ECONOMIC RESEARCH ECONOMICS EMPLOYMENT ENTRY BARRIERS EQUILIBRIUM CREDIT RATIONING EXCESS DEMAND EXPENDITURE EXPORTS FINANCIAL DEEPENING FINANCIAL MARKETS FORMAL LOANS FORMS OF CREDIT GDP HOLDING HOLDINGS HOUSEHOLD INCOME HOUSING INCENTIVE EFFECTS INCOME INCOME INEQUALITY INCOME SHOCKS INDEBTED INFORMAL BORROWING INFORMAL CREDIT INSTRUMENT INSURANCE INSURANCE MARKET INTEREST RATE INTEREST RATE RESTRICTIONS INTEREST RATES INTERNATIONAL BANK INTERNATIONAL DEVELOPMENT INVESTMENT PURPOSES LABOR MARKET LABOR MARKETS LACK OF COLLATERAL LAND AS COLLATERAL LAND OWNERSHIP LAND PARCELS LAND TENURE LAND TITLING LAND USE LENDERS LIQUIDITY LOAN LOAN AMOUNT LOAN AMOUNTS LOAN APPLICATION LOAN APPLICATIONS LOAN MARKET LOAN TERMS LOANABLE FUNDS LOANS FROM FAMILY LOSS OF COLLATERAL LOW INTEREST RATES MARKET ACCESS MAXIMUM LIKELIHOOD ESTIMATION MAXIMUM LIKELIHOOD METHOD MICRO-FINANCE MICRO-FINANCE INSTITUTIONS MICROFINANCE MICROFINANCE INSTITUTIONS MISSING MARKETS MOBILE PHONE MONEY LENDER MONEYLENDERS OPPORTUNITY COST PAYOFFS PERMANENT INCOME PORTFOLIO PORTFOLIOS POTENTIAL BORROWERS PRODUCTIVITY PROFITABILITY PROPERTY RIGHTS REGRESSION MODELS REMITTANCES REPAYMENT RESOURCE ALLOCATION RETURN RETURNS RISK AVERSION RURAL CREDIT RURAL CREDIT MARKETS RURAL FINANCIAL MARKETS SAVINGS SMALLHOLDER AGRICULTURE SOCIAL CAPITAL SOCIAL NETWORKS SOURCE OF CREDIT SUPPLY OF CREDIT TITLES TRANSACTION TRANSACTION COST TRANSACTION COSTS TRANSITORY INCOME VALUE OF OUTPUT WAGES WEALTH WEALTH EFFECTS ACCESS TO CAPITAL ACCESS TO CREDIT ACCESS TO INFORMATION ADVERSE SELECTION AGRICULTURAL COMMODITIES AGRICULTURAL FINANCE AGRICULTURAL PRACTICES AGRICULTURE AMOUNT OF LOAN ASSET OWNERSHIP ASSETS BANK ACCOUNT BANK LOAN BANK POLICY BORROWING CONSTRAINTS CAPITAL MARKET COLLATERAL FOR LOANS COLLATERAL REQUIREMENTS COLLATERAL RISK COMPARATIVE ADVANTAGES CONSUMER DURABLES CREDIT ACCESS CREDIT CONSTRAINT CREDIT CONSTRAINTS CREDIT MARKET CREDIT MARKETS CREDIT RATIONING CREDIT UNIONS DEMAND FOR CREDIT DEMAND-SIDE FACTORS DEPENDENT DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISEQUILIBRIUM DURABLE DURABLE ASSETS ECONOMETRIC ANALYSIS ECONOMETRIC EVIDENCE ECONOMIC DEVELOPMENT ECONOMIC OUTCOMES ECONOMIC RESEARCH ECONOMICS EMPLOYMENT ENTRY BARRIERS EQUILIBRIUM CREDIT RATIONING EXCESS DEMAND EXPENDITURE EXPORTS FINANCIAL DEEPENING FINANCIAL MARKETS FORMAL LOANS FORMS OF CREDIT GDP HOLDING HOLDINGS HOUSEHOLD INCOME HOUSING INCENTIVE EFFECTS INCOME INCOME INEQUALITY INCOME SHOCKS INDEBTED INFORMAL BORROWING INFORMAL CREDIT INSTRUMENT INSURANCE INSURANCE MARKET INTEREST RATE INTEREST RATE RESTRICTIONS INTEREST RATES INTERNATIONAL BANK INTERNATIONAL DEVELOPMENT INVESTMENT PURPOSES LABOR MARKET LABOR MARKETS LACK OF COLLATERAL LAND AS COLLATERAL LAND OWNERSHIP LAND PARCELS LAND TENURE LAND TITLING LAND USE LENDERS LIQUIDITY LOAN LOAN AMOUNT LOAN AMOUNTS LOAN APPLICATION LOAN APPLICATIONS LOAN MARKET LOAN TERMS LOANABLE FUNDS LOANS FROM FAMILY LOSS OF COLLATERAL LOW INTEREST RATES MARKET ACCESS MAXIMUM LIKELIHOOD ESTIMATION MAXIMUM LIKELIHOOD METHOD MICRO-FINANCE MICRO-FINANCE INSTITUTIONS MICROFINANCE MICROFINANCE INSTITUTIONS MISSING MARKETS MOBILE PHONE MONEY LENDER MONEYLENDERS OPPORTUNITY COST PAYOFFS PERMANENT INCOME PORTFOLIO PORTFOLIOS POTENTIAL BORROWERS PRODUCTIVITY PROFITABILITY PROPERTY RIGHTS REGRESSION MODELS REMITTANCES REPAYMENT RESOURCE ALLOCATION RETURN RETURNS RISK AVERSION RURAL CREDIT RURAL CREDIT MARKETS RURAL FINANCIAL MARKETS SAVINGS SMALLHOLDER AGRICULTURE SOCIAL CAPITAL SOCIAL NETWORKS SOURCE OF CREDIT SUPPLY OF CREDIT TITLES TRANSACTION TRANSACTION COST TRANSACTION COSTS TRANSITORY INCOME VALUE OF OUTPUT WAGES WEALTH WEALTH EFFECTS |
| spellingShingle |
ACCESS TO CAPITAL ACCESS TO CREDIT ACCESS TO INFORMATION ADVERSE SELECTION AGRICULTURAL COMMODITIES AGRICULTURAL FINANCE AGRICULTURAL PRACTICES AGRICULTURE AMOUNT OF LOAN ASSET OWNERSHIP ASSETS BANK ACCOUNT BANK LOAN BANK POLICY BORROWING CONSTRAINTS CAPITAL MARKET COLLATERAL FOR LOANS COLLATERAL REQUIREMENTS COLLATERAL RISK COMPARATIVE ADVANTAGES CONSUMER DURABLES CREDIT ACCESS CREDIT CONSTRAINT CREDIT CONSTRAINTS CREDIT MARKET CREDIT MARKETS CREDIT RATIONING CREDIT UNIONS DEMAND FOR CREDIT DEMAND-SIDE FACTORS DEPENDENT DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISEQUILIBRIUM DURABLE DURABLE ASSETS ECONOMETRIC ANALYSIS ECONOMETRIC EVIDENCE ECONOMIC DEVELOPMENT ECONOMIC OUTCOMES ECONOMIC RESEARCH ECONOMICS EMPLOYMENT ENTRY BARRIERS EQUILIBRIUM CREDIT RATIONING EXCESS DEMAND EXPENDITURE EXPORTS FINANCIAL DEEPENING FINANCIAL MARKETS FORMAL LOANS FORMS OF CREDIT GDP HOLDING HOLDINGS HOUSEHOLD INCOME HOUSING INCENTIVE EFFECTS INCOME INCOME INEQUALITY INCOME SHOCKS INDEBTED INFORMAL BORROWING INFORMAL CREDIT INSTRUMENT INSURANCE INSURANCE MARKET INTEREST RATE INTEREST RATE RESTRICTIONS INTEREST RATES INTERNATIONAL BANK INTERNATIONAL DEVELOPMENT INVESTMENT PURPOSES LABOR MARKET LABOR MARKETS LACK OF COLLATERAL LAND AS COLLATERAL LAND OWNERSHIP LAND PARCELS LAND TENURE LAND TITLING LAND USE LENDERS LIQUIDITY LOAN LOAN AMOUNT LOAN AMOUNTS LOAN APPLICATION LOAN APPLICATIONS LOAN MARKET LOAN TERMS LOANABLE FUNDS LOANS FROM FAMILY LOSS OF COLLATERAL LOW INTEREST RATES MARKET ACCESS MAXIMUM LIKELIHOOD ESTIMATION MAXIMUM LIKELIHOOD METHOD MICRO-FINANCE MICRO-FINANCE INSTITUTIONS MICROFINANCE MICROFINANCE INSTITUTIONS MISSING MARKETS MOBILE PHONE MONEY LENDER MONEYLENDERS OPPORTUNITY COST PAYOFFS PERMANENT INCOME PORTFOLIO PORTFOLIOS POTENTIAL BORROWERS PRODUCTIVITY PROFITABILITY PROPERTY RIGHTS REGRESSION MODELS REMITTANCES REPAYMENT RESOURCE ALLOCATION RETURN RETURNS RISK AVERSION RURAL CREDIT RURAL CREDIT MARKETS RURAL FINANCIAL MARKETS SAVINGS SMALLHOLDER AGRICULTURE SOCIAL CAPITAL SOCIAL NETWORKS SOURCE OF CREDIT SUPPLY OF CREDIT TITLES TRANSACTION TRANSACTION COST TRANSACTION COSTS TRANSITORY INCOME VALUE OF OUTPUT WAGES WEALTH WEALTH EFFECTS ACCESS TO CAPITAL ACCESS TO CREDIT ACCESS TO INFORMATION ADVERSE SELECTION AGRICULTURAL COMMODITIES AGRICULTURAL FINANCE AGRICULTURAL PRACTICES AGRICULTURE AMOUNT OF LOAN ASSET OWNERSHIP ASSETS BANK ACCOUNT BANK LOAN BANK POLICY BORROWING CONSTRAINTS CAPITAL MARKET COLLATERAL FOR LOANS COLLATERAL REQUIREMENTS COLLATERAL RISK COMPARATIVE ADVANTAGES CONSUMER DURABLES CREDIT ACCESS CREDIT CONSTRAINT CREDIT CONSTRAINTS CREDIT MARKET CREDIT MARKETS CREDIT RATIONING CREDIT UNIONS DEMAND FOR CREDIT DEMAND-SIDE FACTORS DEPENDENT DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISEQUILIBRIUM DURABLE DURABLE ASSETS ECONOMETRIC ANALYSIS ECONOMETRIC EVIDENCE ECONOMIC DEVELOPMENT ECONOMIC OUTCOMES ECONOMIC RESEARCH ECONOMICS EMPLOYMENT ENTRY BARRIERS EQUILIBRIUM CREDIT RATIONING EXCESS DEMAND EXPENDITURE EXPORTS FINANCIAL DEEPENING FINANCIAL MARKETS FORMAL LOANS FORMS OF CREDIT GDP HOLDING HOLDINGS HOUSEHOLD INCOME HOUSING INCENTIVE EFFECTS INCOME INCOME INEQUALITY INCOME SHOCKS INDEBTED INFORMAL BORROWING INFORMAL CREDIT INSTRUMENT INSURANCE INSURANCE MARKET INTEREST RATE INTEREST RATE RESTRICTIONS INTEREST RATES INTERNATIONAL BANK INTERNATIONAL DEVELOPMENT INVESTMENT PURPOSES LABOR MARKET LABOR MARKETS LACK OF COLLATERAL LAND AS COLLATERAL LAND OWNERSHIP LAND PARCELS LAND TENURE LAND TITLING LAND USE LENDERS LIQUIDITY LOAN LOAN AMOUNT LOAN AMOUNTS LOAN APPLICATION LOAN APPLICATIONS LOAN MARKET LOAN TERMS LOANABLE FUNDS LOANS FROM FAMILY LOSS OF COLLATERAL LOW INTEREST RATES MARKET ACCESS MAXIMUM LIKELIHOOD ESTIMATION MAXIMUM LIKELIHOOD METHOD MICRO-FINANCE MICRO-FINANCE INSTITUTIONS MICROFINANCE MICROFINANCE INSTITUTIONS MISSING MARKETS MOBILE PHONE MONEY LENDER MONEYLENDERS OPPORTUNITY COST PAYOFFS PERMANENT INCOME PORTFOLIO PORTFOLIOS POTENTIAL BORROWERS PRODUCTIVITY PROFITABILITY PROPERTY RIGHTS REGRESSION MODELS REMITTANCES REPAYMENT RESOURCE ALLOCATION RETURN RETURNS RISK AVERSION RURAL CREDIT RURAL CREDIT MARKETS RURAL FINANCIAL MARKETS SAVINGS SMALLHOLDER AGRICULTURE SOCIAL CAPITAL SOCIAL NETWORKS SOURCE OF CREDIT SUPPLY OF CREDIT TITLES TRANSACTION TRANSACTION COST TRANSACTION COSTS TRANSITORY INCOME VALUE OF OUTPUT WAGES WEALTH WEALTH EFFECTS Duponchel, Marguerite Ali, Daniel Ayalew Deininger, Klaus Credit Constraints, Agricultural Productivity, and Rural Nonfarm Participation : Evidence from Rwanda |
| description |
Although the potentially negative
impacts of credit constraints on economic development have
long been discussed conceptually, empirical evidence for
Africa remains limited. This study uses a direct elicitation
approach for a national sample of Rwandan rural households
to assess empirically the extent and nature of credit
rationing in the semi-formal sector and its impact using an
endogenous sample separation between credit-constrained and
unconstrained households. Being credit constrained reduces
the likelihood of participating in off-farm self-employment
activities by about 6.3 percent while making participation
in low-return farm wage labor more likely. Even within
agriculture, elimination of all types of credit constraints
in the semi-formal sector could increase output by some 17
percent. Two suggestions for policy emerge from the
findings. First, the estimates suggest that access to
information (education, listening to the radio, and
membership in a farm cooperative) has a major impact on
reducing the incidence of credit constraints in the
semi-formal credit sector. Expanding access to information
in rural areas thus seems to be one of the most promising
strategies to improve credit access in the short term.
Second, making it easy to identify land owners and transfer
land could also significantly reduce transaction costs
associated with credit access. |
| topic_facet |
ACCESS TO CAPITAL ACCESS TO CREDIT ACCESS TO INFORMATION ADVERSE SELECTION AGRICULTURAL COMMODITIES AGRICULTURAL FINANCE AGRICULTURAL PRACTICES AGRICULTURE AMOUNT OF LOAN ASSET OWNERSHIP ASSETS BANK ACCOUNT BANK LOAN BANK POLICY BORROWING CONSTRAINTS CAPITAL MARKET COLLATERAL FOR LOANS COLLATERAL REQUIREMENTS COLLATERAL RISK COMPARATIVE ADVANTAGES CONSUMER DURABLES CREDIT ACCESS CREDIT CONSTRAINT CREDIT CONSTRAINTS CREDIT MARKET CREDIT MARKETS CREDIT RATIONING CREDIT UNIONS DEMAND FOR CREDIT DEMAND-SIDE FACTORS DEPENDENT DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISEQUILIBRIUM DURABLE DURABLE ASSETS ECONOMETRIC ANALYSIS ECONOMETRIC EVIDENCE ECONOMIC DEVELOPMENT ECONOMIC OUTCOMES ECONOMIC RESEARCH ECONOMICS EMPLOYMENT ENTRY BARRIERS EQUILIBRIUM CREDIT RATIONING EXCESS DEMAND EXPENDITURE EXPORTS FINANCIAL DEEPENING FINANCIAL MARKETS FORMAL LOANS FORMS OF CREDIT GDP HOLDING HOLDINGS HOUSEHOLD INCOME HOUSING INCENTIVE EFFECTS INCOME INCOME INEQUALITY INCOME SHOCKS INDEBTED INFORMAL BORROWING INFORMAL CREDIT INSTRUMENT INSURANCE INSURANCE MARKET INTEREST RATE INTEREST RATE RESTRICTIONS INTEREST RATES INTERNATIONAL BANK INTERNATIONAL DEVELOPMENT INVESTMENT PURPOSES LABOR MARKET LABOR MARKETS LACK OF COLLATERAL LAND AS COLLATERAL LAND OWNERSHIP LAND PARCELS LAND TENURE LAND TITLING LAND USE LENDERS LIQUIDITY LOAN LOAN AMOUNT LOAN AMOUNTS LOAN APPLICATION LOAN APPLICATIONS LOAN MARKET LOAN TERMS LOANABLE FUNDS LOANS FROM FAMILY LOSS OF COLLATERAL LOW INTEREST RATES MARKET ACCESS MAXIMUM LIKELIHOOD ESTIMATION MAXIMUM LIKELIHOOD METHOD MICRO-FINANCE MICRO-FINANCE INSTITUTIONS MICROFINANCE MICROFINANCE INSTITUTIONS MISSING MARKETS MOBILE PHONE MONEY LENDER MONEYLENDERS OPPORTUNITY COST PAYOFFS PERMANENT INCOME PORTFOLIO PORTFOLIOS POTENTIAL BORROWERS PRODUCTIVITY PROFITABILITY PROPERTY RIGHTS REGRESSION MODELS REMITTANCES REPAYMENT RESOURCE ALLOCATION RETURN RETURNS RISK AVERSION RURAL CREDIT RURAL CREDIT MARKETS RURAL FINANCIAL MARKETS SAVINGS SMALLHOLDER AGRICULTURE SOCIAL CAPITAL SOCIAL NETWORKS SOURCE OF CREDIT SUPPLY OF CREDIT TITLES TRANSACTION TRANSACTION COST TRANSACTION COSTS TRANSITORY INCOME VALUE OF OUTPUT WAGES WEALTH WEALTH EFFECTS |
| author |
Duponchel, Marguerite Ali, Daniel Ayalew Deininger, Klaus |
| author_facet |
Duponchel, Marguerite Ali, Daniel Ayalew Deininger, Klaus |
| author_sort |
Duponchel, Marguerite |
| title |
Credit Constraints, Agricultural Productivity, and Rural Nonfarm Participation : Evidence from Rwanda |
| title_short |
Credit Constraints, Agricultural Productivity, and Rural Nonfarm Participation : Evidence from Rwanda |
| title_full |
Credit Constraints, Agricultural Productivity, and Rural Nonfarm Participation : Evidence from Rwanda |
| title_fullStr |
Credit Constraints, Agricultural Productivity, and Rural Nonfarm Participation : Evidence from Rwanda |
| title_full_unstemmed |
Credit Constraints, Agricultural Productivity, and Rural Nonfarm Participation : Evidence from Rwanda |
| title_sort |
credit constraints, agricultural productivity, and rural nonfarm participation : evidence from rwanda |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014-02 |
| url |
http://documents.worldbank.org/curated/en/2014/02/18910977/credit-constraints-agricultural-productivity-rural-nonfarm-participation-evidence-rwanda https://hdl.handle.net/10986/17305 |
| work_keys_str_mv |
AT duponchelmarguerite creditconstraintsagriculturalproductivityandruralnonfarmparticipationevidencefromrwanda AT alidanielayalew creditconstraintsagriculturalproductivityandruralnonfarmparticipationevidencefromrwanda AT deiningerklaus creditconstraintsagriculturalproductivityandruralnonfarmparticipationevidencefromrwanda |
| _version_ |
1807154633330655232 |
| spelling |
dig-okr-10986173052024-08-08T14:09:23Z Credit Constraints, Agricultural Productivity, and Rural Nonfarm Participation : Evidence from Rwanda Duponchel, Marguerite Ali, Daniel Ayalew Deininger, Klaus ACCESS TO CAPITAL ACCESS TO CREDIT ACCESS TO INFORMATION ADVERSE SELECTION AGRICULTURAL COMMODITIES AGRICULTURAL FINANCE AGRICULTURAL PRACTICES AGRICULTURE AMOUNT OF LOAN ASSET OWNERSHIP ASSETS BANK ACCOUNT BANK LOAN BANK POLICY BORROWING CONSTRAINTS CAPITAL MARKET COLLATERAL FOR LOANS COLLATERAL REQUIREMENTS COLLATERAL RISK COMPARATIVE ADVANTAGES CONSUMER DURABLES CREDIT ACCESS CREDIT CONSTRAINT CREDIT CONSTRAINTS CREDIT MARKET CREDIT MARKETS CREDIT RATIONING CREDIT UNIONS DEMAND FOR CREDIT DEMAND-SIDE FACTORS DEPENDENT DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISEQUILIBRIUM DURABLE DURABLE ASSETS ECONOMETRIC ANALYSIS ECONOMETRIC EVIDENCE ECONOMIC DEVELOPMENT ECONOMIC OUTCOMES ECONOMIC RESEARCH ECONOMICS EMPLOYMENT ENTRY BARRIERS EQUILIBRIUM CREDIT RATIONING EXCESS DEMAND EXPENDITURE EXPORTS FINANCIAL DEEPENING FINANCIAL MARKETS FORMAL LOANS FORMS OF CREDIT GDP HOLDING HOLDINGS HOUSEHOLD INCOME HOUSING INCENTIVE EFFECTS INCOME INCOME INEQUALITY INCOME SHOCKS INDEBTED INFORMAL BORROWING INFORMAL CREDIT INSTRUMENT INSURANCE INSURANCE MARKET INTEREST RATE INTEREST RATE RESTRICTIONS INTEREST RATES INTERNATIONAL BANK INTERNATIONAL DEVELOPMENT INVESTMENT PURPOSES LABOR MARKET LABOR MARKETS LACK OF COLLATERAL LAND AS COLLATERAL LAND OWNERSHIP LAND PARCELS LAND TENURE LAND TITLING LAND USE LENDERS LIQUIDITY LOAN LOAN AMOUNT LOAN AMOUNTS LOAN APPLICATION LOAN APPLICATIONS LOAN MARKET LOAN TERMS LOANABLE FUNDS LOANS FROM FAMILY LOSS OF COLLATERAL LOW INTEREST RATES MARKET ACCESS MAXIMUM LIKELIHOOD ESTIMATION MAXIMUM LIKELIHOOD METHOD MICRO-FINANCE MICRO-FINANCE INSTITUTIONS MICROFINANCE MICROFINANCE INSTITUTIONS MISSING MARKETS MOBILE PHONE MONEY LENDER MONEYLENDERS OPPORTUNITY COST PAYOFFS PERMANENT INCOME PORTFOLIO PORTFOLIOS POTENTIAL BORROWERS PRODUCTIVITY PROFITABILITY PROPERTY RIGHTS REGRESSION MODELS REMITTANCES REPAYMENT RESOURCE ALLOCATION RETURN RETURNS RISK AVERSION RURAL CREDIT RURAL CREDIT MARKETS RURAL FINANCIAL MARKETS SAVINGS SMALLHOLDER AGRICULTURE SOCIAL CAPITAL SOCIAL NETWORKS SOURCE OF CREDIT SUPPLY OF CREDIT TITLES TRANSACTION TRANSACTION COST TRANSACTION COSTS TRANSITORY INCOME VALUE OF OUTPUT WAGES WEALTH WEALTH EFFECTS Although the potentially negative impacts of credit constraints on economic development have long been discussed conceptually, empirical evidence for Africa remains limited. This study uses a direct elicitation approach for a national sample of Rwandan rural households to assess empirically the extent and nature of credit rationing in the semi-formal sector and its impact using an endogenous sample separation between credit-constrained and unconstrained households. Being credit constrained reduces the likelihood of participating in off-farm self-employment activities by about 6.3 percent while making participation in low-return farm wage labor more likely. Even within agriculture, elimination of all types of credit constraints in the semi-formal sector could increase output by some 17 percent. Two suggestions for policy emerge from the findings. First, the estimates suggest that access to information (education, listening to the radio, and membership in a farm cooperative) has a major impact on reducing the incidence of credit constraints in the semi-formal credit sector. Expanding access to information in rural areas thus seems to be one of the most promising strategies to improve credit access in the short term. Second, making it easy to identify land owners and transfer land could also significantly reduce transaction costs associated with credit access. 2014-03-18T20:04:31Z 2014-03-18T20:04:31Z 2014-02 http://documents.worldbank.org/curated/en/2014/02/18910977/credit-constraints-agricultural-productivity-rural-nonfarm-participation-evidence-rwanda https://hdl.handle.net/10986/17305 English en_US Policy Research Working Paper;No. 6769 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ application/pdf text/plain World Bank, Washington, DC |