Skip to Main Content
 

Global Search Box

 
 
 
 

Files

File List


Dissertation.IsaiGuizar.pdf (4.7 MB)

ETD Abstract Container

Abstract Header

Financial Development, the Dynamics of Technology Choices, and Poverty Traps

Guizar-Mateos , Isai
http://rave.ohiolink.edu/etdc/view?acc_num=osu1374159141

Abstract Details

2013, Doctor of Philosophy, Ohio State University, Agricultural, Environmental and Developmental Economics.
This dissertation investigates the influence of broadly defined dimensions of financial development in overcoming poverty traps, through the sustained adoption of advanced production technologies. It explores farm-household decisions of adopting and abandoning higher-productivity technologies, under different scenarios of inclusion into credit and deposit markets. A shallow financial environment is characterized by a wedge between high interest rates charged on loans and low interest rates paid on deposits and by relatively stringent borrowing limits. Via numerical approximations of infinite horizon, dynamic, stochastic models, the analysis finds solutions of a representative farmer's dynamic decision problem for three different scenarios of financial exclusion/inclusion in loan or deposit markets. By expanding the model to a whole economy of heterogeneous farmers, the effects of financial development are examined at the aggregate level. The results show that scenarios of partial inclusion - either just loans or deposits - bring greater benefits, in terms of the sustained adoption of advanced technologies, than a scenario of financial exclusion. The influence on technology choices of the two types of financial services is not uniform. Simulations using different borrowing limits show that, unless the credit limit is sufficiently nonrestrictive, deposit facilities are a superior intervention to boost rates of technology adoption and prevent its abandonment. In regions of very low wealth, however, there is no demand for deposit facilities or willingness to reduce indebtedness. In the steady-state, adoption rates are insensitive to loan interest rates. Thus, in cases of non-interest credit rationing, subsidized credit would not encourage adoption. In contrast, adoption rates increase and abandonment declines as deposit interest rates increase. A solution for the representative farmer’s dynamic optimization problem is also found for a finite horizon. The results show the farmer’s incentives to adopt (abandon) the advanced technology are weaker (stronger) when the retirement period is near, regardless of the scenario of financial exclusion or inclusion. Econometric estimations are carried out to test the numerical results regarding the asymmetric effects of credit and of deposit facilities on the sustained adoption of advanced production technologies as well as the life cycle hypotheses. The estimates for the determinants of adoption indicate that the effect of credit is at least as large as the effect of deposits. The estimation of static models for abandonment provides statistical evidence about the greater influence of deposits. The dynamic model estimates indicate that deposits positively affect the likelihood of being in the regime of advanced production, while the effect of credit is not significantly different from zero. Moreover, the results reinforce the notion of households trapped in traditional production technologies by showing that the technology status in the initial period is strongly correlated with unobserved heterogeneity. The lower (higher) incentives to adopt (abandon) as the household advances in the life cycle are also validated with the empirical evidence from the static and dynamic models.
Claudio Gonzalez-Vega (Advisor)
Mario Miranda (Committee Member)
Abdoul Sam (Committee Member)
160 p.
Agricultural Economics; Economics

Recommended Citations

Citations

  • Guizar-Mateos , I. (2013). Financial Development, the Dynamics of Technology Choices, and Poverty Traps [Doctoral dissertation, Ohio State University]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=osu1374159141

    APA Style (7th edition)

  • Guizar-Mateos , Isai. Financial Development, the Dynamics of Technology Choices, and Poverty Traps. 2013. Ohio State University, Doctoral dissertation. OhioLINK Electronic Theses and Dissertations Center, http://rave.ohiolink.edu/etdc/view?acc_num=osu1374159141.

    MLA Style (8th edition)

  • Guizar-Mateos , Isai. "Financial Development, the Dynamics of Technology Choices, and Poverty Traps." Doctoral dissertation, Ohio State University, 2013. http://rave.ohiolink.edu/etdc/view?acc_num=osu1374159141

    Chicago Manual of Style (17th edition)

osu1374159141
838
© 2013, some rights reserved.Creative Commons License Financial Development, the Dynamics of Technology Choices, and Poverty Traps by Isai Guizar-Mateos is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License. Based on a work at etd.ohiolink.edu.
This open access ETD is published by The Ohio State University and OhioLINK.