What is it about?
Endogeneity of credit access, third party collateral, credit market, rural economy, safety net programs, panel data econometrics
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Why is it important?
A theoretical model of credit contract under third party collateral was developed. Estimation considers the endogenous credit access variable by using valid instruments. The validity and relevance of instruments are tested. Poor households are credit constrained but it can be possible to improve this by targeting these groups.
Perspectives
The paper is more innovative by openly arguing moral hazard issues from credit providers and farmers perspectives. A penalty is introduced in the theoretical model and argued the credit market is better off if regulated by market mechanisms than government involvement.
Dr Million A Tadesse
University of Waterloo
Read the Original
This page is a summary of: Fertilizer adoption, credit access, and safety nets in rural Ethiopia, Agricultural Finance Review, August 2014, Emerald,
DOI: 10.1108/afr-09-2012-0049.
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