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BRAC Subsidized Credit Program among Farmers and Socio-economic Outcomes
Last registered on July 19, 2019

Pre-Trial

Trial Information
General Information
Title
BRAC Subsidized Credit Program among Farmers and Socio-economic Outcomes
RCT ID
AEARCTR-0004460
Initial registration date
July 19, 2019
Last updated
July 19, 2019 12:08 PM EDT
Location(s)
Region
Primary Investigator
Affiliation
State University of New York (Binghamton) & Harvard University
Other Primary Investigator(s)
PI Affiliation
Binghamton University
PI Affiliation
University of Tsukuba and BRAC
PI Affiliation
Binghamton University
Additional Trial Information
Status
Completed
Start date
2012-06-01
End date
2014-08-31
Secondary IDs
Abstract
The BCUP provides a customized credit services to farmers who cultivate land owned by other either fully or partially. The farmers are provided loans at subsided rate of interest which is a flat rate of10 per cent per year. The effective rate of interest comes to about 15 to 20 per cent on declining balance depending on the mode of repayment of the principal and interest due. According to the rules of the Micro-Credit Regulatory of the Central Bank, NGOs can charge up to a maximum of 27 per cent rate of interest on declining balance for their microfinance operations.

Although the provision of extension service is not stipulated in the terms and conditions of the project contract, BRAC decided to include extension services on the premise that improved farming practices could increase the profitability of farming and thereby improve capacity of the borrowers to repay the loan.

In this project, the experimental intervention will examine the effect on various productivity outcomes among farmers.
External Link(s)
Registration Citation
Citation
Jimi, Nusrat et al. 2019. "BRAC Subsidized Credit Program among Farmers and Socio-economic Outcomes." AEA RCT Registry. July 19. https://doi.org/10.1257/rct.4460-2.0
Former Citation
Jimi, Nusrat et al. 2019. "BRAC Subsidized Credit Program among Farmers and Socio-economic Outcomes." AEA RCT Registry. July 19. https://www.socialscienceregistry.org/trials/4460/history/50430
Sponsors & Partners

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Experimental Details
Interventions
Intervention(s)
BRAC, one of the largest NGOs in Bangladesh, introduced in 2009 the ‘Tenant Farmers Development Project’ (called Borga Chashi Unnayan Prakalpa). The project was initiated with Tk. 5,000 million (USD 70 million) as a revolving loan fund from the Bangladesh Bank (Central Bank of Bangladesh) with an interest rate of 5 per cent per month (the rate at which commercial banks can borrow funding from the Central Bank). Funding was initially given for three years with a target of reaching 300,000 farmers for credit provision within this period. Subsequently, in 2012, Bangladesh Bank approved extension of the project for another three years.

The main objective of BCUP program was to reduce the dependence of tenant farmers on high-cost informal markets for financing their working capital needs. Tenant farmers do not typically have access to formal financial institutions. By reducing credit constraints, the BCUP program aimed at improving farm productivity and livelihoods of rural small-scale farm households of Bangladesh significantly.
Borga Chashi Unnayan Prakalpa (BCUP) provides a customized credit services to farmers who cultivate land owned by themselves (owner farms) and by others either fully or partially (pure tenant, tenant-owner etc.). Loans are provided at subsided interest rate - a flat rate of 10 per cent per year. The effective rate of interest is 15 to 20 per cent on declining balance depending on the mode of repayment of the principal and interest due. The credit limit is $62 to $375 (i.e., taka 5,000-30,000 ); duration is 6-10 months; grace period is 1 month and the instalment is monthly. BCUP was targeted to reach all 484 Upazilas (sub-districts) of Bangladesh in successive phases. By September 2012, the program reached 212 Upazilas.

Households are selected for a loan disbursement based on a few stages of verification. The first stage entails initial selection of members. Members are selected by matching each household against the BCUP eligibility criteria and orienting the farmers with the BCUP program and its terms and conditions. The second stage is the formation of the Village Organization (VO). After initial verification of information, if members agree to the terms and conditions of the BCUP, a small group of five farmers are formed informally. Stage three entails collection of member information. In the final fourth stage, the members list is finalized through verification by Branch Manager on the eligibility of the selected members.

After this selection process, new members get a formal admission and attend an orientation meeting. An important feature of the BCUP is the formation of Village Organization (VO) and its use as a platform for service delivery. In the VO, members are grouped in teams of five members, and four to eight teams consisting of 20 to 40 members forming the village level informal tenant farmer association. The VO meets once every month on a fixed day and time which is attended by the BCUP Program Organizer and an agricultural technician. Apart from the discussion of loan proposal and collection of repayment of the instalment dues and the deposit of savings, farmers can get agricultural information and advice from the Agriculture Development Officer.

The BCUP program relies on clustered randomized control trial (RCT) design. The program first identified 40 potential branch offices for program scale-up in 2012. Branches were randomized into a treatment group (20 branches), which was being offered credit services. For each treatment and control branch, from the universe of all villages within an 8-kilometer radius branch catchment area six villages were selected at random for each of the two groups. The resultant sample was 240 villages which comprise the study sample for this project.
In each of the 240 villages, we conducted a census survey spanning 61,322 eligible households. Using household census information and based on the program eligibility criteria, 7,563 households were identified as eligible for the BCUP program -- 4,228 and 3,335 made up the treatment and control areas, respectively.
Intervention Start Date
2012-06-01
Intervention End Date
2014-08-31
Primary Outcomes
Primary Outcomes (end points)
earnings, rice yield, profits
Primary Outcomes (explanation)
Secondary Outcomes
Secondary Outcomes (end points)
empowerment measurements
Secondary Outcomes (explanation)
Experimental Design
Experimental Design
A randomized control evaluation design was adopted to evaluate the BCUP. Initially, the program identified the potential 40 branch offices to scale up the program in the year 2012. The research team then randomly drew twenty (20) treatment branches for intervention and the rest twenty (20) branches were designated as control branch offices. Six villages were selected randomly from each treatment and control branch among all the villages within the 8 kilometer radius of the branch catchment area. Thus, 240 villages were selected for this study. A
census was conducted in 240 villages covering 61,322 households for detecting eligible households. Then eligible households were identified from the treatment and control villages respectively by following the household eligibility criteria. Total number of eligible households were 4,228 and 3,335 in the treatment and control areas, respectively. A total of 2,164 households were selected in treatment villages and 2,167 households were selected as sample households in the control villages.

Thus, a total of 4,331 households were selected for the quantitative baseline survey. The Survey was successfully conducted on 4,301 households which included 2,155 in treatment areas and 2,146 in control areas. For qualitative study twenty four tenant farmers from twelve villages and six districts belonging to six BRAC operation divisions were selected. For the anthropometric survey all the households with at least one child under the age of five were selected. A total of 1,607 households satisfied this criterion, on whom the anthropometric survey was conducted.
Experimental Design Details
Randomization Method
computer program
Randomization Unit
Branch office level
Was the treatment clustered?
Yes
Experiment Characteristics
Sample size: planned number of clusters
40 branch offices
Sample size: planned number of observations
From each branch office 6 villages were randomly selected, and from each village 18 households were surveyed. Baseline survey covered 4,301 households out of a total of 4,331 selected households
Sample size (or number of clusters) by treatment arms
40 branch offices, evenly divided by treatment and control.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB
INSTITUTIONAL REVIEW BOARDS (IRBs)
IRB Name
Study has received IRB approval. Details not available.
IRB Approval Date
Details not available
IRB Approval Number
Details not available
Post-Trial
Post Trial Information
Study Withdrawal
Intervention
Is the intervention completed?
No
Is data collection complete?
Data Publication
Data Publication
Is public data available?
No
Program Files
Program Files
Reports and Papers
Preliminary Reports
Relevant Papers