While potentially negative impacts of credit constraints on economic development have long been discussed conceptually, empirical evidence for Africa remains limited. We use a direct elicitation approach on a national sample of Rwandan rural households to empirically assess the extent and nature of credit rationing in the semi-formal sector and its impact, using an endogenous switching model. Elimination of all constraints could increase output by some 17 per cent. Implications for policy and research are spelled out.
Ali, D.A.; Deininger, K.; Duponchel, M. Credit Constraints and Agricultural Productivity: Evidence from rural Rwanda. Journal of Development Studies (2014) 50 (5) 649-665. [DOI: 10.1080/00220388.2014.887687]