Credit constraints and aquaculture productivity

Abstract

The aquaculture sector is a capital intensive production process where access to credit is helpful in order to develop and manage farms in developing countries. Nevertheless, a supply of credit is often not readily available, which is creating credit constraint situations. This study investigates how credit constraints affect the productivity of aquaculture farmers in Bangladesh. An endogenous switching regression model is used to estimate the effects of credit constraints on productivity. The results show that productivity is significantly higher for farmers who are not exposed to credit constraints. This result reveals significant production-enhancing effects when using modern inputs for both constrained and unconstrained farmers. However, the effects are larger for the credit-unconstrained farmers because they have the opportunity to buy higher quality inputs and use them in a better input mix.

Keywords:

• Credit constraints
• endogenous switching regression model
• aquaculture
• Bangladesh

Note

Acknowledgments

Authors are grateful to the aquaculture farmers of Bangladesh for sharing their valuable information.

Notes

1 This has been shown in studies by Adjognon, Liverpool-Tasie, and Reardon (2017), Poulton, Kydd, and Dorward (2006), Kelly, Adesina, and Gordon (2003) and Poulton, Dorward, and Kydd (1998).

Additional information

Funding

The authors would like to thank the Danish International Development Agency (DANIDA) for its financial support for the project “Upgrading pangas and tilapia value chains in Bangladesh”, project number F38A26778, under which this research was conducted.