Date of Graduation

Spring 5-19-2017

Document Type

Thesis

Degree Name

Master of Science in International and Development Economics (MSIDEC)

College/School

College of Arts and Sciences

Department/Program

Agricultural Economics

First Advisor

Suparna Chakraborty

Abstract

Global concern is rising about the performance of the agricultural sector in view of its integral role in poverty alleviation, economic development and increasing nutritional demand. At the epicenter of the concern is declining productivity due to poor financial inclusion of sector leading to low investment and returns to agriculture. A cursory examination of the existing literature on the subject reveals quite varied dimensions to the analysis of agriculture productivity-financial development nexus. Focusing on the role of financial sector development as a catalyst to agricultural productivity, this study employs panel data and advances a fixed effects econometrics approach to empirically investigate the linkage between agricultural productivity and financial sector development. Results from the analysis suggests that financial sector development contributes positively to agricultural productivity, but the magnitude of the effect is statistically insignificant. This result is robust to multiple specifications and controls for institutional quality, economic size, agro-environmental factors, level of infrastructure, human capital, as well as year and country fixed effects. Additionally, agriculture credit has a positive and significant effect on productivity across sample of 75 developing countries, but positive and insignificant across developed economies. In view of the foregoing, it is imperative that policies targeted at boosting agricultural productivity are predicated upon creating an incentive system that channels greater credit to boost agricultural investment. In this sense, financial sector development in this is not an end itself, but a means to an end.

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