Ali, Daniel AyalewDeininger, Klaus2012-06-292012-06-292012-06https://hdl.handle.net/10986/9327This paper uses Ethiopian data to explore credit rationing in semi-formal credit markets and its effects on farmers' resource allocation and crop productivity. Credit rationing -- both voluntarily and involuntarily -- is found to be widespread in the sampled rural villages, largely because of risk-related factors. Political and social networks emerge as key determinants of access to credit among smallholder, peasant farmers. Significant regional variation emerges as well. In high-potential, surplus producing areas where credit is largely used for agricultural production, eliminating credit constraints is estimated to increase productivity by roughly 11 percentage points. By contrast, in low-productivity, drought prone areas where loans were rarely used to acquire inputs for crop production, the authors find no relationship between credit rationing and agricultural productivity. To be effective, efforts to improve agricultural productivity not only need to increase credit supply, but also explore the reasons for credit rationing and the availability of productive opportunities.en-USCC BY 3.0 IGOACCESS TO CAPITALACCESS TO CREDITACCESS TO FORMAL CREDITACCESS TO LOANSADVERSE SELECTIONAGRICULTURAL ACTIVITIESAGRICULTURAL ECONOMICSAGRICULTUREALLOCATION OF CREDITAMOUNT OF CREDITASSETSBORROWERBORROWINGBORROWING CONSTRAINTSCAPITAL CONSTRAINTSCAPITAL MARKETCAPITAL MARKETSCOLLATERALCOLLATERAL REQUIREMENTCOLLATERAL REQUIREMENTSCOMPETITIVE MARKETSCONSUMER DURABLESCONSUMPTION SMOOTHINGCOOPCOOPERATIVESCREDIT ACCESSCREDIT ASSOCIATIONSCREDIT AVAILABILITYCREDIT CONSTRAINTCREDIT CONSTRAINTSCREDIT MARKETCREDIT MARKET ACCESSCREDIT MARKETSCREDIT RATIONINGCREDIT UNIONSCREDITSDEMAND FOR CREDITDEPENDENTDEVELOPING COUNTRIESDEVELOPMENT ECONOMICSDEVELOPMENT POLICYDEVELOPMENT STRATEGYDISEQUILIBRIUMECONOMETRIC ANALYSISECONOMIC CRITERIAECONOMIC DEVELOPMENTECONOMIC OPPORTUNITIESEMPLOYMENT OPPORTUNITIESENDOWMENTSEQUALITYEQUILIBRIUM CREDITEQUILIBRIUM CREDIT RATIONINGEXCESS DEMANDEXCHANGE RATEEXCLUSIONFARMERFARMERSFINANCIAL MARKETSFORMAL CREDITFORMAL FINANCEFORMAL FINANCIAL INSTITUTIONSFORMAL LOANHOLDINGHOUSEHOLD WELFAREHOUSEHOLDSINCENTIVE EFFECTSINCOMEINDEBTEDINEFFICIENCYINFORMAL CREDITINFORMAL LOANSINFORMATIONAL ASYMMETRIESINSTRUMENTINSURANCEINTEREST RATEINTEREST RATESINTERNATIONAL BANKINVESTMENT OPPORTUNITIESLABOR MARKETSLACK OF ACCESSLACK OF COLLATERALLAND ADMINISTRATIONLAND OWNERSHIPLENDERSLIQUIDITYLOANLOAN AMOUNTLOAN APPLICANTSLOAN APPLICATIONLOAN APPLICATIONSLOAN REQUESTLOAN SIZELOAN SIZESLOAN TERMSLOANABLE FUNDSMAXIMUM LIKELIHOOD ESTIMATIONMAXIMUM LIKELIHOOD METHODMICRO-FINANCEMICRO-FINANCE INSTITUTIONSMICROFINANCEMICROFINANCE INSTITUTIONSMISSING MARKETSMONEYLENDERSMORAL HAZARDOUTREACHPERMANENT INCOMEPORTFOLIOPOSITIVE COEFFICIENTPOSSESSIONPOTENTIAL BORROWERSPRODUCTIVITYPROFITABILITYPROVISION OF CREDITREGRESSION MODELSREPAYMENTRETURNSRURAL CREDITRURAL CREDIT MARKETSRURAL FINANCIAL MARKETSSAVINGSSMALL FARMSMALL LOANSSMALLHOLDERSMALLHOLDER FARMERSSMALLHOLDERSSOCIAL NETWORKSSOURCE OF CREDITSTOCKSTERMS OF LOANTRANSACTIONTRANSACTION COSTTRANSACTION COSTSTRANSITION COUNTRIESUNIONSUSE OF COLLATERALVALUE OF OUTPUTVARIABLE INPUTSVILLAGEVILLAGESWARRANTSWEALTHWEALTH EFFECTSWORKING CAPITALWorld Bank10.1596/1813-9450-6096