Impact of Microcredit on Agricultural Farm Performance and Food Security in Bangladesh

Examining microcredit as a crucial factor for sustainable development of the agricultural sector
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This study assesses improvements in food availability through a reduction in crop production inefficiency of farms in Bangladesh. It examines the role of microcredit in raising food productive efficiency and augmenting food affordability. It also provides appropriate policy suggestions for ensuring better food security, and examines the link between microcredit, food security, and poverty alleviation. The study states that the research conducted applied the Stochastic Frontier Analysis (SFA), Data Envelopment Analysis (DEA) method, and Propensity Score Matching Techniques to analyze farm level survey data from Rangpur, Dinajpur, Bogra, and Rajsahahi districts of northern Bangladesh. Findings include:

  • Level of efficiency of microcredit receiving farms is, on an average, 1% higher than the microcredit non-receiving farms;
  • Farms can reduce their production cost around 19% if they operate at full efficiency levels;
  • Average income of microcredit receiving farms is 9.46% higher than that of microcredit non-receiving farms;
  • Policies which extend microcredit and ensure fair, timely, and low-cost delivery of microcredit to marginal and small farmers can lead to reduction of agricultural farm inefficiency and hence lead to improve food security and reduce poverty.

About this Publication

By Wadud, M. A.