Rural finance and agricultural technology adoption in Ethiopia: does institutional design matter? | Land Portal

Resource information

Date of publication: 
December 2015
Resource Language: 
ISBN / Resource ID: 
handle:10568/68481
License of the resource: 

Financial cooperatives and microfinance institutions (MFIs) are the two major sources of rural finance in Ethiopia. Whereas MFIs are relatively new, financial cooperatives have existed for centuries in various forms. The coexistence of two different institutions serving the same group of people, and delivering the same financial services, raises several policy questions. Those questions have become particularly relevant, as the government has embarked on developing a new strategy for improving rural financial services delivery. This study is expected to serve as an input to that policy discussion. Using a unique household survey dataset and the propensity-score-matching technique, we examine the impacts of the two financial service providers on agricultural technology adoption. The results suggest that access to institutional finance has significant positive impacts on both the adoption and extent of technology use. However, when impacts are disaggregated by type of financial institution and farm size, considerable heterogeneities are observed. In particular, financial cooperatives have a greater impact on technology adoption than do MFIs, and the impacts appear to vary depending on farm size and types of inputs. The underlying implications of these results are discussed in light of the country’s rural finance policies and programs.

Authors and Publishers

Author(s), editor(s), contributor(s): 

Rashid, S.
Borzaga, C.
Getnet, Kindie
Abate, Gashaw Tadesse

Publisher(s): 

About IFPRI


The International Food Policy Research Institute (IFPRI) provides research-based policy solutions to sustainably reduce poverty and end hunger and malnutrition in developing countries. Established in 1975, IFPRI currently has more than 500 employees working in over 50 countries. It is a research center of theCGIAR Consortium, a worldwide partnership engaged in agricultural research for development.


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CGIAR (CGIAR)

CGIAR is the only worldwide partnership addressing agricultural research for development, whose work contributes to the global effort to tackle poverty, hunger and major nutrition imbalances, and environmental degradation.


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