Institutional credit and rice productivity: a case study of District Lahore, Pakistan Muhammad Khalid Bashir Department of Development Economics, Faculty of Agricultural Economics and Rural Sociology, University of Agriculture, Faisalabad, Pakistan, and Yasir Mehmood Department of Agribusiness, Lahore West Region, United Bank Limited, Lahore, Pakistan Abstract Purpose – The purpose of this paper is to analyze how institutional credit affected the productivity of rice crop in District Lahore, Punjab Pakistan. Design/methodology/approach – For this purpose, stratified random sampling technique was adopted to select the sample respondents. The district was divided into three strata; from each stratum two villages were randomly selected and from each village ten loanee farmers were randomly selected from the given list of borrowers. An equal number of non-loanee farmers were also selected. Cobb Douglas function was used to calculate the impact of credit on rice productivity. Findings – The coefficient of credit was significant, which indicated that credit has a positive impact on the productivity of rice, providing a clue that credit is an important tool for improving and increasing the agricultural productivity in general and that of rice in particular. Originality/value – The paper will be an important addition to the literature in the current credit impact studies and will help especially the agricultural planners who are responsible for allocating funds for the agricultural sector in general and for the rice sector in particular. The paper’s recommendations will help mitigate the problems of the farming community, especially of the small farmers in securing the institutional credit. Keywords Agriculture, Credit, Rice, Pakistan, Productivity rate Paper type Case study Introduction Pakistan’s economy is affected by escalation of war on terror and intensification of the global financial crisis which infiltrated into domestic economy through decline in exports and a noticeable retard in foreign direct inflows. The real gross domestic product (GDP) growth remained 2.0 percent in 2008-2009 as against 4.1 percent last year. Agriculture sector grew at 4.7 percent as compared to 1.1 percent of last year and target of 3.5 percent for the year. Major crops accounting for 33.4 percent of agricultural value added with a notable growth of 7.7 percent surpassing the target of 4.5 percent and as against a negative growth of 6.4 percent last year. Rice is the third largest crop after wheat and cotton and is highly valued cash and major export item. It accounts for 5.9 percent of value added in agriculture and 1.3 percent in GDP. Pakistan grows enough The current issue and full text archive of this journal is available at www.emeraldinsight.com/1756-137X.htm JEL classification – D20, G21, Q14, R51 CAER 2,4 412 China Agricultural Economic Review Vol. 2 No. 4, 2010 pp. 412-419 q Emerald Group Publishing Limited 1756-137X DOI 10.1108/17561371011097722