QARD-E-HASANAH FINANCING AND FARM PRODUCTION EFFICIENCY: EVIDENCE FROM RURAL BANGLADESH

Abstract

The main objective of this study is to examine the impact of Qard e Hasana on farm production efficiency of rural households in Jhenidah district of Bangladesh. In this case study a multistage sampling approach was adopted for selecting 160 households farm in rural area from Jhenidah district. Regression (probit) model, and an analysis of the stochastic frontier production were used to assess the data that had been gathered. The bulk of the heads of rural agricultural households are in their active years, the research showed. It was also shown that the majority of farm household heads possess a medium level of farming expertise and technical proficiency. According to probit regression result, age of the microcredit borrower (Value of P ˂ 0.05), size of the farm (Value of P ˂ 0.01), size of household (Value of P ˂ 0.01), experience in farming (Value of P ˂ 0.01), and educational status (Value of P ˂ 0.05) are the important variables that affect rural farm in accessing Qard e Hasana. According to results output of the farm rises with size of the farm (Value of P is less than 0.05), family labor (Value of P is less than 0.05), and hired labor (Value of Value of P is less than 0.05), but falls with an expansion of intermediate materials (Value of P is less than 0.10). According to inefficiency model, Qard e Hasana (Value of P ˂ 0.05), age of the borrower (Value of P ˂ 0.05), experience in farming (Value of P ˂ 0.01), educational status (Value of P ˂ 0.05), size of household (Value of P ˂ 0.10), and education (Value of P ˂ 0.05) all contribute to a farmer's technical efficiency. The average technical efficiency of 0.79 suggests that there is opportunity for a 21 percent increase in technological efficacy of households’ farm. Farm production rises with the addition of land, family, and hired labor, whereas intermediate inputs diminish efficiency. For a sustainable policy option to promote production capability among households’ farm in the research area, it is necessary to improve farmer education and raise knowledge of the benefits of Qard e Hasana.