Impact of Access to Credit on Farm Productivity of Fruit and Vegetable Growers in Chile

Abstract

The objective of this paper is to analyze the factors that determine productivity of fruit and vegetable growers in central Chile, focusing especially on the effect of short-term credit on farm productivity for market-oriented farmers. We explicitly test for possible selection bias using a panel data set from a survey conducted in 2006 and 2008 with 177 farmers. Our results indicate that short-term credit does not have an impact on farm productivity, while other factors as education and the type of activity do. These results suggest that other providers of credit, such as informal credit institutions, may relax short-term credit constraints in rural financial markets in Chile.