Verlag:
London School of Economics and Political Science (LSE), Department of International Development, London
Zusammenfassung:
Collective action (CA) allows individuals to overcome market and state failures, something particularly relevant in rural areas and highly imperfect markets such as agricultural credit. To analyse the relation between CA in the form of Rural Producer Organizations (RPOs) and access to agricultural credit, we estimate a logit model exploiting data on 2.3 million farmers in Colombia, as well as a fixed effects model using original data on 15,000 municipality-year observations of RPOs and credit allocation. We find a positive relationship between CA and access to credit at both the farmer and municipality levels. The relationship is heterogeneous, varying by farmer size and credit source. For credit allocated to small farmers, we find a positive relation, but only via public credit; for credit allocated to large farmers, the relation is also positive, but only via private credit. We find no effect of CA on medium-size farmers' access to credit. Our results imply that CA's potential to foster rural financial development depends on pre-existing contextual conditions, notably the segmentation of the credit market. The distributional effects of CA, and its dependence on contextual conditions, should be considered carefully in policy design.