What is the impact of rural bank credit access on the technical efficiency of smallholder cassava farmers in Ghana? An endogenous switching regression analysis

Abstract

This paper assesses the impact of access to credit from rural and community banks (RCBs) on the technical efficiency of smallholder cassava farmers in Ghana. The study employed the stochastic frontier, and endogenous switching regression models to estimate the technical efficiency, and the impact of RCB credit access, respectively, on a randomly selected sample of 300 smallholder cassava farmers in the Fanteakwa District of Ghana. Results suggest that cassava farmers in the District are 70.5 percent technically efficient implying that cassava yield levels could be increased further by 29.5 percent without changing the current levels of inputs. The results further reveal that the gender of the household head, access to extension services, membership in farmer organizations, and proximity to the bank are the major factors that positively influence farmers to access credit from RCBs. On average, farmers who accessed credit from RCBs have significantly higher technical efficiencies than farmers who did not access, suggesting that access to credit from RCBs positively impacts the technical efficiency of smallholder cassava farmers.