Agricultural Credit, Production and Livelihoods in South Asia: A Panel and Country-Specific Analysis of SAARC Nations

Abstract

This paper investigates the role of agricultural credit in influencing agricultural production and agricultural GDP across SAARC countries over the period 2008–2023. Using panel econometric techniques with fixed effects and robust standard errors, as well as country-specific regressions, the study explores how credit interacts with key agricultural and livelihood indicators including rural population, employment in agriculture, arable land, fertilizer consumption, and rural electrification. Two models were estimated: one focusing on agricultural production and the other on agricultural GDP. The results indicate that credit has a limited or inconsistent effect on agricultural production but exerts a strong positive influence on agricultural GDP, suggesting its greater role in income support and livelihood stability than in direct productivity gains. Country-level heterogeneity underscores the importance of institutional quality, input delivery mechanisms, and structural constraints in shaping credit effectiveness. The study contributes to the literature by offering a comparative SAARC-wide perspective and highlights policy needs for improved credit targeting, integration with extension services, and resilience-building in rural financial systems.