Abstract
This study investigates the effects of microcredit on crop productivity in three villages located in district
Charsadda, Pakistan. Khushali Bank, Pakistan, is an important institute that finances microcredit ranging
from 15,000 to 50,000 PKR (Pakistani Rupees) per person. Sample size of 200 was choose for the analysis
of this study, out of which 90 responded. Ninety farmers from three villages producing maize, tobacco, and
sugarcane were interviewed. A paired sample t-test was applied to compare crop productivity in situations
where microcredit was supplied with situations where it was not. Production per acre of all the three crops
show a significant positive correlation with the amount of microcredit obtained from the bank. However,
crop productivity remained significantly constant. Thus micro financing generally improves crop
production; however, the constancy of crop productivity is explained by small credit volumes, by high
interest rates, by lack of modern agricultural technology, by lack of productive ideas, and by bad
monitoring through field officers of banks. The analysis of this study suggests some policy implications
first, micro financing is a source of encouragement for the needy farmers, so local banks should advertise
micro financing regularly. Second, the banks should increase its micro financing credit up to 200000 PKR,
so that farmers can easily manage their expenses that will be more beneficial for local economy and
individual profit. Third, Banks must decrease interest rate that will encourage needy farmers to take loans
on regular basis.
MUHAMMAD ROVIDAD, ALI RAZA, SHAHID AKBAR. (2020) Effects of Microcredit on Crop Productivity in District Charsadda, Khyber Pakhtunkhwa, International Review of Management and Business Research, Volume 9, Issue 4 .
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