Does access to credit influence smallholder farmers’ maize productivity and food security in Malawi? A panel conditional mixed process analysis

Chindikani Duncan, Anthony Kaphamtengo, Righteous Wanangwa Kachali, Praise Thanthwe Pahuwa, Lenard Kumwenda, & Dymphna Gondwe

Abstract
This study used panel data from the 2016 and 2019 waves of the Malawi Integrated Household Survey, part of the Living Standards Measurement Study of the World Bank and National Statistical Office, to examine the impact of credit access on smallholder farmers’ maize productivity and household food security. Despite the recognised importance of credit in agricultural development, many Malawian smallholders lack sufficient access, constraining investments in essential inputs. Previous research has examined the effect of credit on productivity or food security separately, leaving a gap in understanding their joint dynamics. Addressing this gap, this study employed a panel conditional mixed process (CMP) approach to jointly estimate the effect of credit on maize yields and food security, showing that access to credit increases maize productivity by 18% and improves food security by 1.5 points, while controlling for endogeneity and selection bias. Given the significant influence of soil quality and market accessibility revealed in the results, policies should prioritise linking credit provision with soil fertility interventions and rural infrastructure development to maximise the effect on productivity and food security.