Trade credits in farming: A drain for gain in the aquaculture industry of Bangladesh

Trade credit (TC) is a more easily accessible financing source to the most small-scale aquaculture farms with limited access to institutional credit in the developing countries. However, it is often argued that TC is a drain, on one hand, and the gain, on the other hand, without quantifying and iden...

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Bibliographic Details
Published in:Aquaculture economics & management 2024-10, Vol.28 (4), p.628-642
Main Authors: Rahman, Md Takibur, Khan, Md Akhtaruzzaman, Islam, Imranul, Dey, Madan Mohan
Format: Article
Language:English
Subjects:
administrative management
Aquaculture
aquaculture industry
Bangladesh
capital
credit
Developing countries
Farms
Industrial development
LDCs
probability
production technology
Small-scale aquaculture
trade
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Summary:Trade credit (TC) is a more easily accessible financing source to the most small-scale aquaculture farms with limited access to institutional credit in the developing countries. However, it is often argued that TC is a drain, on one hand, and the gain, on the other hand, without quantifying and identifying sources of drain and gain. This study empirically examines the sources and size of benefits (gain) and costs (drain) of TC in aquaculture with a sample of 280 farms in Bangladesh using Stochastic Meta Frontier and Propensity Score Matching. Moreover, factors influencing the probability of having access to TC are explored using Probit regressions. TC enables financially constrained access to inputs, thereby avoiding production losses due to lack of capital. It also allows farms’ to use improved production technology with a positive tradeoff between benefits and costs.
ISSN:1365-7305
1551-8663
1551-8663
DOI:10.1080/13657305.2023.2289936