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Increasing rice productivity in Ghana: Do savings with rural and community banks matter?

Increasing rice productivity in Ghana: Do savings with rural and community banks matter? This paper analysed the motives behind farmers' savings with Rural and Community Banks (RCBs) and the effect of these savings on rice yield in the Hohoe Municipality of the Volta region of Ghana.Design/methodology/approachA multi-stage sampling approach was used to draw a random sample of 222 rice farmers, and a structured questionnaire was employed to collect cross-sectional data. A Likert scale was used to rank the motive behind farmers' savings while the endogenous switching regression model was used to estimate the effect of savings on rice yield.FindingsThe results of the study showed that most farmers mobilise savings to enhance farm investment which is critical to increasing rice productivity. Improved labour and fertiliser use had a positive influence on rice yield, while farm size had an inverse relation with rice yield. Further, the findings show that savings with RCBs help mobilise the necessary finance to enhance rice productivity. In terms of the treatment effect of savings, the results indicate that farmers who patronise saving products of RCBs recorded a statistically significant average yield of 1.41 Mt/ha more than those not patronising saving products from any bank.Practical implicationsWhile the literature on agricultural finance focuses largely on credit, this study demonstrates that savings hold significant benefits for the development of agriculture through productivity gains. The importance of this demonstration is further shown by the fact that credit access depends on the ability to save in most developing countries.Social implicationsThere is a need to educate farmers about the essence of patronising formal savings products.Originality/valueThis study represents the first attempt at linking farmers' savings to agricultural productivity using an econometric methodology in Ghana. The study serves as a foundation paper and for that matter will serve as a guide to future research on savings mobilisation and agricultural productivity nexus. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Agricultural Finance Review Emerald Publishing

Increasing rice productivity in Ghana: Do savings with rural and community banks matter?

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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
0002-1466
DOI
10.1108/afr-12-2020-0179
Publisher site
See Article on Publisher Site

Abstract

This paper analysed the motives behind farmers' savings with Rural and Community Banks (RCBs) and the effect of these savings on rice yield in the Hohoe Municipality of the Volta region of Ghana.Design/methodology/approachA multi-stage sampling approach was used to draw a random sample of 222 rice farmers, and a structured questionnaire was employed to collect cross-sectional data. A Likert scale was used to rank the motive behind farmers' savings while the endogenous switching regression model was used to estimate the effect of savings on rice yield.FindingsThe results of the study showed that most farmers mobilise savings to enhance farm investment which is critical to increasing rice productivity. Improved labour and fertiliser use had a positive influence on rice yield, while farm size had an inverse relation with rice yield. Further, the findings show that savings with RCBs help mobilise the necessary finance to enhance rice productivity. In terms of the treatment effect of savings, the results indicate that farmers who patronise saving products of RCBs recorded a statistically significant average yield of 1.41 Mt/ha more than those not patronising saving products from any bank.Practical implicationsWhile the literature on agricultural finance focuses largely on credit, this study demonstrates that savings hold significant benefits for the development of agriculture through productivity gains. The importance of this demonstration is further shown by the fact that credit access depends on the ability to save in most developing countries.Social implicationsThere is a need to educate farmers about the essence of patronising formal savings products.Originality/valueThis study represents the first attempt at linking farmers' savings to agricultural productivity using an econometric methodology in Ghana. The study serves as a foundation paper and for that matter will serve as a guide to future research on savings mobilisation and agricultural productivity nexus.

Journal

Agricultural Finance ReviewEmerald Publishing

Published: Jul 7, 2022

Keywords: Saving; Rural and community banks (RCBs); Rice farmers; Yields; Ghana

References