64th ISI World Statistics Congress - Ottawa, Canada

64th ISI World Statistics Congress - Ottawa, Canada

Agricultural Credit in Sumatera: Way Forward for National Economic Recovery


64th ISI World Statistics Congress - Ottawa, Canada

Format: CPS Abstract

Keywords: credit

Session: CPS 60 - Statistics and agriculture

Tuesday 18 July 5:30 p.m. - 6:30 p.m. (Canada/Eastern)


Banking intermediation should be reinforced to support the agriculture sector playing its major role in the national economic recovery amid the pandemic. Using aggregate and individual data, this study identifies several strategic issues of the agricultural credit in Sumatra during the period of 2018-2022. Specifically, this study discusses the determining factors of agricultural credit, the quality of agricultural credit distributed, and the source of credit for agricultural households. The result shows that the lending rate and the third-party funds have a stable influence in both periods of pre-pandemic and pandemic towards agricultural credit, while the association between farmer’s term of trade and agricultural credit is only significant in the pandemic period. Moreover, third-party funds and farmers’ terms of trade are also the determining factors of the credit quality measured by the nonperforming loan (NPL) ratio but only during the pandemic. Last but not the least, financial inclusion is the key driver of agricultural households’ decision to borrow from banks. Based on those results, this study has several policy implications