Effects of rural microcredit on agricultural production: evidence from the Agroamigo program

Abstract:

This study aims to evaluate the effect of rural microcredit on the value of agricultural production in the Northeastern Brazilian municipalities served by the Agroamigo Program, considering the amount of loans granted and the time of exposure to benefits. Therefore, it was used the differences in differences (DD) method with control for fixed effect for an annual panel of 1,791 municipalities in the region from 2003 to 2015, using administrative data from the Program, social indicators of the Annual Report of Social Information (RAIS), rainfall data from the Centre for Environmental Data Analysis (CEDA), and demographic, economic and agricultural production indicators of the Brazilian Institute of Geography and Statistics (IBGE). The main results of the research show that Agroamigo's loan volume had a positive effect on livestock production, and this effect was potentiated for those municipalities with more than seven years of exposure to the Program. However, no statistically significant effects were found on agricultural activity. Finally, compared to the total amounts of microcredit and the benefits generated, measured only in terms of livestock production, it was identified that the program presented a return rate of 52% the aggregate from 2005 to 2015.

Keywords:
impact evaluation; rural microcredit; Agroamigo; agricultural production; northeast