Does access to agricultural credit help disaster-affected farming households to invest more on agricultural input?

Abstract

PurposeNatural calamities impair agricultural households' ability to invest in their farms. Facilitating access to agricultural credit may assist farmers in the face of negative revenue shocks. The aim of this study is to investigate the impact of agricultural credit on the agricultural input expenditure of disaster-affected farmers in Bangladesh.Design/methodology/approachThe study utilizes data on 2,519 disaster-affected farming households from Bangladesh's Household Income and Expenditure Study (HIES) 2016–2017, which employs a nationwide representative five-year interval survey. Further, propensity score matching (PSM) identification strategy is used to estimate the average treatment effect on the treated (ATET), and Mahalanobis distance matching (MDM) is used for the robustness test. In addition, heterogeneous analysis has been conducted to explore the impact of agricultural credit on different types of farming households.FindingsThe findings reveal that access to agricultural credit has a favorable and significant effect on farm input expenditure for disaster-affected farmers. Therefore, agricultural credit accessibility could be utilized as a policy tool to assist disaster-affected farmers in improving their investment capacity, and hence, agricultural output.Originality/valueThis study, using a quasi-experimental design of access to agricultural credit on agricultural input expenditures of the disaster-affected farming households in coastal areas of Bangladesh to estimate the causal effect.