Technology Adoption Behavior under Credit Constraint

Technology adoption in the agriculture sector is a key for the overall development of a least developed country like Nepal. Lack of credit is an important constraint to technology adoption. Extensive imperfections in credit market get in the way of technology adoption behavior of farm households of such countries. This study explores the effect of credit market imperfection in fertilizer adoption behavior of farm households of Nepal using Heckman''s two step procedure. This has been analyzed first finding factors determining both credit constraint situation and credit demand decision, and secondly how the level of credit affect fertilizer market participation and intensity of fertilizer use using household survey data for 150 household from Banke district of Nepal. The study found that poverty defined in terms of land holding size increased the credit constraint situation and the credit constraint affected fertilizer use intensity negatively. Credit market participation was determined by family size while amount of credit was dependent on land holding size even if most of the households borrowed in through group lending.