Assessing the Effect of Information Sharing in the Farm Credit Market: Evidence From Developing Countries

ABSTRACT This paper investigates the effect of financial information sharing on agricultural credit across 60 developing countries. We first develop a simple theoretical model that elucidates how enhanced information flow, via private credit bureaus and public credit registries, can mitigate information asymmetries and improve lending decisions in the farm credit market. The model predicts that when financial institutions have access to shared borrower information, they are more likely to increase credit provision to agricultural enterprises. To empirically validate these predictions, we employ panel data covering the period 2013–2020, sourced from the FAO, World Development Indicators, Worldwide Governance Indicators, and the World Bank's Doing Business database. Using the System Generalised Method of Moments (GMM) estimator to address potential endogeneity and dynamic effects, we find robust evidence that information sharing significantly enhances agricultural credit availability. This effect is particularly pronounced in the long term, suggesting that sustained improvements in information infrastructure yield cumulative benefits for agricultural finance. Our findings underscore the importance of policy frameworks that promote the development and integration of credit information systems. By facilitating transparency and reducing credit risk, such systems can strengthen the relationship between financial institutions and agricultural enterprises, ultimately supporting broader agricultural development goals.