Influence of Agricultural Credit, Financial Inclusion, and Technology Adoption on Farmers' Economic Performance: A Structural Equation Modeling Approach.
DOI:
https://doi.org/10.64882/ijrt.v14.i3.1621Keywords:
Agricultural Credit; Financial Inclusion; Technology Adoption; Farmers' Economic Performance; Structural Equation Modeling (SEM); Smallholder Farmers; Rural Development; Agricultural Finance; Precision Agriculture; Sustainable Agriculture.Abstract
Agricultural modernization has become increasingly dependent on farmers' access to institutional finance and their ability to adopt innovative agricultural technologies. However, limited financial resources continue to constrain technology adoption among smallholder farmers, thereby affecting agricultural productivity and economic performance. The present study investigates the structural relationships among Agricultural Credit, Technology Adoption, and Farmers' Economic Performance using a Structural Equation Modeling (SEM) approach. A quantitative cross-sectional research design was employed, and primary data were collected from 384 smallholder farmers using a structured questionnaire. The sample size was determined using Cochran's formula with a 95% confidence level and a 5% margin of error. The proposed structural model was estimated using Maximum Likelihood Estimation (MLE). The empirical findings reveal that Agricultural Credit has a significant positive effect on Technology Adoption (β = 0.46, t = 9.20, p < 0.001), indicating that improved access to institutional finance enables farmers to invest in modern agricultural technologies. Furthermore, Technology Adoption exerts a strong positive influence on Farmers' Economic Performance (β = 0.58, t = 9.66, p < 0.001), demonstrating that the adoption of improved farming technologies enhances productivity, profitability, resource-use efficiency, and farm income. The results suggest that technology adoption serves as the primary mechanism through which agricultural credit is transformed into measurable economic benefits. The study concludes that integrated rural development policies combining accessible agricultural finance, technology dissemination, extension services, and financial inclusion can substantially improve agricultural productivity and strengthen rural livelihoods. The findings contribute to the literature on agricultural finance and rural development by providing empirical evidence supporting the sequential relationship between agricultural credit, technological innovation, and farmers' economic performance. The study also offers practical implications for policymakers, financial institutions, agricultural extension agencies, and development organizations seeking to promote sustainable agricultural growth and inclusive rural economic development.
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