A Time Series Analysis of the Effects of Agriculture Credit and Extension Services on Crop Productivity in Malaysia

Abstract

The primary purpose of the present study is to evaluate the impact of agricultural credit, technical efficiency, and extension services on the crop productivity. The context of the study was based in Malaysia and the paddy rice were used as the premier crop. The data was collected from the Malaysian farmers. The method of the study was based on the two-stage estimation process. The technique was used to first evaluate the determinants of the credit access and extension services. The first stage of the study used the Probit model and the second included the stochastic frontier approach. The findings of the study show that farmers are producing below the frontier with average technical effectiveness of 47 percent. The policy factors like credit access, education, extension, and farm size showed that the crop productivity is largely influenced by these factors. The access to agricultural credit and extension services was found to positively influence the crop productivity. Technical efficiency was also found to predict the crop productivity of the region. The results of the study hold implications for the agricultural sector. These findings can be used for the development of policies and procedures for the increase in productivity of the Malaysian agricultural sector.