Agricultural Credit, Farm Performance and Technology Adoption Under Credit Rationing in Peru

This paper examines the role of agricultural credit in shaping farm performance and technology-related outcomes in Peru, using nationally representative microdata from the Encuesta Nacional Agropecuaria (ENA). In a context characterized by credit rationing and institutional constraints, access to finance may influence agricultural income, productivity, and the adoption of improved practices through multiple direct and indirect channels. To address the non-random allocation of credit, the analysis employs a quasi-experimental framework that combines propensity score trimming, block-based common support restrictions, entropy balancing, and doubly robust treatment-effect estimators (IPWRA and AIPW). Descriptive evidence documents substantial heterogeneity in credit sources, loan uses, and rejection reasons, highlighting structural barriers related to collateral, land tenure, and risk. Regression results on the balanced sample indicate positive and statistically significant associations between credit access and both real agricultural income and land productivity. However, estimated treatment effects are sensitive to the estimation strategy: while IPWRA estimates suggest economically meaningful gains among credit recipients, AIPW estimates are smaller and not always statistically distinguishable from zero. Exploratory results further suggest that credit access is positively associated with technology adoption and managerial capacity, consistent with, but not identifying, a potential association between credit approval and technological practices. Overall, the findings are consistent with a growing body of evidence showing that the impacts of agricultural credit are modest, heterogeneous, and context dependent. From a sustainability perspective, the results underscore the importance of complementary interventions—such as land tenure security, risk management instruments, and tailored financial services—in enhancing the effectiveness of rural credit programs in agricultural systems characterized by imperfect markets and high production risk.