Access to credit and maize productivity in Mali

Abstract

PurposeThe aim of this paper is to analyze the effects of access to credit on maize productivity in Mali, by identifying the determinants of credit market participation and maize yield, and then estimating the impact of credit on maize yield.Design/methodology/approachThis study analyzes the impact of credit on maize productivity using data from the World Bank 2014 Living Standards Measurement Survey (LSMS) on Mali, and the endogenous switching regression (ESR) model.FindingsThe results suggest a positive effect of credit on maize yield in Mali. Farm size, production shocks and the female gender exert negative effects on credit market participation, unlike education, intercropping with cotton, male family labor and fertilizer use which show positive effects. Farm size has a negative effect on maize yield, but both male family labor, and fertilizer use exert positive effects. Although the use of credit improves agricultural yields, the results show a greater potential effect for rationed producers, than credit users.Research limitations/implicationsThese results suggest that implementing a credit strategy that allows those currently excluded from the credit market, to participate, could substantially increase productivity and maize production output in furtherance of the country's food security strategy. Gender-based targeting is needed to bridge the gender gap in access to credit.Originality/valueAs far as the authors are aware, this study is the first to explore the credit-farm productivity links in Mali, while addressing selection bias.