Do credit constraints affect the technical efficiency of Boro rice growers? Evidence from the District Pabna in Bangladesh.

Abstract

This study analyzes the effects of credit constraints on technical efficiency of Boro rice growers in the district of Pabna in Bangladesh. Using a simple random sampling technique, the data was collected from 570 Boro rice growers from the Pabna district of Bangladesh. Before conducting a field survey, a theoretical model was designed to identify credit-constrained and non-constrained rice growers. We have analyzed the collected data in two phases: first, we investigated the technical efficiency of Boro rice growers using the stochastic frontier model (SFA); and second, we used an inefficiency effect model to estimate the influence of credit constraints on technical efficiency. Findings indicate that credit-constrained rice growers (CCRG) are 6.7% less technically efficient than credit non-constrained rice growers (CNRG). Findings further indicate that the education level of the household head, family size, certified seed, sowing time, access to extension services, off-farm income, and household savings have significant effects on the technical efficiency of both groups of rice growers. Furthermore, credit size has a significantly positive impact, whereas the interest rate imposed on the principal amount has a significantly negative impact.