Credit Fungibility and Credit Margin of Investment: The Case of Subsistence Farmers in Khyber Pakhtunkhwa

Abstract

In developing countries, credit fungibility is a crucial issue in agricultural credit market, and Pakistan is no exception. The aim of this study is to explore the credit fungibility and credit margin of investment among different farmers’ group in Khyber Pakhtunkhwa. The data were collected from 87 subsistence farmers in Mardan sub-district. Multistage sampling technique was used to select the study area. A standardized questionnaire was used to collect data from farming households’ heads. Credit fungibility ratio and ANOVA were used to explore the credit fungibility and credit margin of investment among the groups of farmers. Results showed that a considerable proportion of loan was used in non-agricultural activities by all farmers in general and small farmers in particular. The findings of the study suggest that a strong monitoring of farmers is needed in the study area. In addition, farmers may be supplied in-kind agricultural credit to control credit fungibility. [ABSTRACT FROM AUTHOR]