Agricultural Microcredit for Tenant Farmers: Evidence from a Field Experiment in Bangladesh
The authors worked on the quantitative component of the mixed method study conducted by the Agricultural Economics Unit at BRAC‐Research and Evaluation Division. This work would not be possible without the contribution of the late Mahabub Hossain and Atiur Rahman, who initiated the BCUP program in Bangladesh. Many thanks to Sir Fazle Hasan Abed, AMR Chowdhury, Muhammad Musa, Shib Narayan Kairy, Abdul Bayes, Shameraan Abed, Sudhir C Nath, Joachim von Braun, Yasuyuki Sawada, Chieko Umetsu, Biru Paksha Paul, Akhter Ahmed, Abdus Sattar Mandal, Mustafizur Rahman, Mostafa K Mujeri, and many others for their support, comments, and suggestions on different occasions. The authors would like to thank editor Travis Lybbert, one AJAE associate editor, two referees, Conner Mullally, Spiro Stefanou, Narayan C Das, Atonu Rabbani, Asadul Islam, Minhaj Mahmud, Kelly Davidson, and seminar participants at BRAC, Monash University, the University of Tokyo, University of Florida, Delhi, and Bangkok for their excellent comments and suggestions. Special thanks to Alamgir Hossain, Belayet Hossain, ANM Rahman and Tahsina Naz Khan for their assistance during the experiment and data management. The authors acknowledge the following financial support: Bangladesh Bank for sponsoring the BCUP program, the International Initiative for Impact Evaluation (3ie) for sponsoring the impact study, and Grants in aid for Japan Society for the Promotion of Science Fellow (Tokubetsu Kenkyuin Shrei‐hi) for editing the manuscript. All errors are our own.
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Abstract
We study the impact of an agricultural microcredit program on the livelihoods of small, marginal, and landless tenant farmers in Bangladesh based on a Randomized Control Trial (RCT). Twenty percent of eligible households acquire at least one loan from the program within two years of the start of the intervention. Results show that access to credit has positive but imprecisely estimated effects on adoption of modern varieties (MV) of rice as well as rice yield. The microcredit program increases crop farm income but has no significant effect on total income or expenditure. Although the program does not have a significant effect on most economic outcomes, it demonstrates an increase in farm activities among the targeted farmers. Our study suggests that facilitating access to credit without addressing other constraints may not be enough to increase investment and profits of tenant farmers.
