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Article
Publication date: 13 March 2017

Temesgen Fitamo Bocher, Bamlaku Alamirew Alemu and Zerihun Getachew Kelbore

The purpose of this paper is to investigate how credit access affects the welfare of households and sheds light on how household characteristics influence the decision to…

Abstract

Purpose

The purpose of this paper is to investigate how credit access affects the welfare of households and sheds light on how household characteristics influence the decision to take credit and the efficiency in credit use.

Design/methodology/approach

This study uses data from the fourth round of the Ethiopian Rural Household Survey conducted in 2009, and examines factors that determine the decision to take credit and the effect of such decision on household welfare. The household welfare variable is measured by the food security indicator and total food expenditure. The study employs endogenous Regime Switching model to account for endogeneity in access to credit and self-selection bias in the decision to participate in credit.

Findings

The result from the kernel distribution shows households with access to credit have more consumption expenditure than those without access to credit. The ordinary least square regression shows that access to credit increases total consumption by 12 percent without considering self-selection bias. Participation in non-farm activity increases the demand for credit by 17 percent. Land holding, household size, and participation in saving associations increase the probability of getting credit by 5, 11, and 20 percent, respectively. Access to credit appears to have a positive impact on food security in both actual and counterfactual cases for the current credit receivers.

Originality/value

This study provides a thorough analysis of the impacts of access to credit on household welfare in Ethiopia. The study contributes to the debate on the link between access to credit and household welfare and provides valuable input for policy makers.

Details

African Journal of Economic and Management Studies, vol. 8 no. 1
Type: Research Article
ISSN: 2040-0705

Keywords

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Article
Publication date: 13 March 2017

Daniel Makina

The purpose of this paper is to explore the landscape of financial services in Africa through the prism of a selection of research papers.

Abstract

Purpose

The purpose of this paper is to explore the landscape of financial services in Africa through the prism of a selection of research papers.

Design/methodology/approach

This is a review of literature that focusses on access to financial services (i.e. financial inclusion) and empirical findings from research papers in this issue of the journal.

Findings

The landscape of financial services in Africa is as heterogeneous as the countries comprising the continent. Common features include low levels of financial inclusion, low financial literacy, constrained access to credit, costly credit when available, gender discrimination in account ownership, and use and inefficient foreign exchange markets. Nevertheless, there are promising innovations, especially the mobile money innovation, which have the potential to foster more inclusive financial systems.

Originality/value

All the papers in this volume are based on original research shedding new insights on various aspects of financial services in Africa.

Details

African Journal of Economic and Management Studies, vol. 8 no. 1
Type: Research Article
ISSN: 2040-0705

Keywords

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Article
Publication date: 7 December 2015

Bamlaku Alamirew, Harald Grethe, Khalid Hassan Ali Siddig and Tesfamicheal Wossen

Like many countries in the developing world, Ethiopia has leased out a huge amount of land to foreign investors. However, empirical evidence on the contribution of…

Abstract

Purpose

Like many countries in the developing world, Ethiopia has leased out a huge amount of land to foreign investors. However, empirical evidence on the contribution of international investments to employment generation and food security is limited. The purpose of this paper is to examine the contribution of large-scale farms to local-level food security in Bako Tibe District, Oromia Region.

Design/methodology/approach

Primary data were collected from 200 randomly selected households from two purposefully selected villages in the district. Secondary data were collected from government offices and the literature. Propensity score matching was used to match households based on observable characteristics. Using the World Food Programme (WFP) approach, the food consumption score (FCS) of households was calculated. Finally, the Average Treatment effect for the Treated was determined.

Findings

Findings indicate that foreign land deals increase the odds of households falling into food insecurity and that the employment opportunities are both temporal and marginal. Furthermore, these land deals result in a decline of households’ FCS and thus have a negative effect on households’ food security.

Research limitations/implications

The result is based on a case study which is not generalizable to the whole of Ethiopia.

Practical implications

The result implies that future endeavours should resort to substantial changes in the principles of investment as well as the design and enforcement of contracts on land transfers so that international investors can commit to objectives beyond private profit.

Originality/value

It examines the effect of large-scale land transfers commonly termed as land grabbing on local food security. The paper makes an important contribution to the current policy debates regarding land grabbing in Ethiopia as research about the contribution of land deals to the food security is limited.

Details

International Journal of Social Economics, vol. 42 no. 12
Type: Research Article
ISSN: 0306-8293

Keywords

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