Participation in village savings and lending associations and rice profitability in Tanzania: Application of propensity score matching and endogenous switching regression

Abstract

We assess the contribution of participation in bundled service-bundled VSLAs on rice productivity and profit among smallholder rice farmers in Mvomero District, Tanzania. The study propensity score matching (PSM) and endogenous switching regression (ESR) models, and found that participation in VSLA has a positive and significant contribution to rice productivity and profit for smallholder rice farmers. Participation in VSLAs increases farmers' ability to regenerate income for investing in improving productivity and profitability and enhancing rice sector development. VSLAs prove as a tool for building financial capital through savings and easy access to credit in rural areas. This study improves on existing research and offers new insights into the effects of VSLA as one of the financial inclusion tools on the economic activities of agricultural households in Tanzania.