The Impact of Credit Policy on Rice Production in Myanmar

Abstract

Rural finance has long been an important tool for poverty reduction and rural development by donors and governments, but the impacts have been controversial. Measuring impact is challenging due to identification problems caused by selection bias and governments' targeted interventions, while randomised trial data are scarce and limited to contexts where little to no rural finance exists. Using an author-collected dataset, we provide insights on a large-scale long-lasting subsidised rice credit programme in Myanmar, one of the poorest and, until recently, most economically isolated countries in Asia. Identification relies on a fuzzy regression discontinuity design, exploiting an arbitrary element to the credit provision rule which is based on rice landholding size. Although we find little evidence that rice yield or output is increased, we do see that the programme has some positive effects on total household income, suggesting a positive spillover effect on other farm income activities.

Rural development and transformation of the rice sector in Myanmar: Introduction of best management practices for sustainable rice agriculture

“…Nevertheless, by 2017, mean rice yields increased by 0.6 t/ha (SD = 1.1) and closely reached the 2017 national average of 3.8 t/ha (FAO Statistics Division, 2020). This development demonstrates that rice farmers in Myanmar have benefited from the economic and agricultural reforms in the 2010s (Aung et al, 2019; Belton et al, 2021). No significant differences were found between adopters and non-adopters.…”

“…The positive rice productivity trend can partially be associated with better access to financial resources for improving rice cultivation (Tun et al, 2015). Aung, Nguyen, and Sparrow (2019) found that the national credit policy has been particularly beneficial for the delta region, where an additional 1 USD of seasonal credit per acre is associated with an increase of USD 2.1–2.5 in rice income per acre and of USD 58–61 in total annual income. In general, the annual income of farmers more than doubled between 2012 and 2017.…”

A comprehensive history of regression discontinuity designs: An empirical survey of the last 60 years

“…Finally, Aung et al. (2019) provide insights into a large‐scale subsidized credit program in Myanmar (formerly Burma), one of the poorest and isolated countries in Asia. Once again, the identification strategy relies on a credit provision rule, in this case, based on rice landholding size.…”

A Comprehensive History of Regression Discontinuity Designs: An Empirical Survey of the last 60 Years

“…Finally, Aung et al (2019) provide insights into a large-scale subsidized credit program in Myanmar (formerly Burma), one of the poorest and isolated countries in Asia. Once again, the identification strategy relies on a credit provision rule, in this case based on rice landholding size.…”