Agricultural microcredit for tenant farmers: Evidence from a field experiment in Bangladesh

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.