Access to credit and farmland abandonment nexus: The case of rural Ghana

Abstract

AbstractCredit has been identified as an essential tool to improve poor households' livelihood. Therefore, for rural farm households to improve their welfare and invest in productive agriculture activity, access to credit must be promoted. This paper examines how credit accessibility influences rural farm households' farmland abandonment reduction in Ghana. Using survey data collected from four regions in Ghana, the endogenous switching regression (ESR) model, and the problem confronting index (PCI) model were employed in the estimation. The findings revealed that households with access to credit are more likely to not abandon their farmland than a random farmer from the sample. Also, different household groups showed a heterogeneous impact of credit on farmland abandonment. Our findings provide policy implications to reduce farmland abandonment. For example, the negative credit accessibility impact on farmland abandonment implies that government and policymakers should target policies (e.g., improving the rural financial market) that will motivate farmers to reduce farmland abandonment.