f9c197ef-f3ff-4559-ba14-a594ba21acbc20250924054257984wseas:wseasmdt@crossref.orgMDT DepositWSEAS TRANSACTIONS ON ENVIRONMENT AND DEVELOPMENT2224-34961790-507910.37394/232015http://wseas.org/wseas/cms.action?id=4031110202511020252110.37394/232015.2025.21https://wseas.com/journals/ead/2025.phpJehonaShkodraDepartment of Agroeconomy, Faculty of Agriculture and Veterinary, University of Prishtina, KOSOVOFjollaGashiDepartment of Agroeconomy, Faculty of Agriculture and Veterinary, University of Prishtina, KOSOVOPrespaYmeriDepartment of Agroeconomy, Faculty of Agriculture and Veterinary, University of Prishtina, KOSOVOLinditaIbishiDepartment of Agroeconomy, Faculty of Agriculture and Veterinary, University of Prishtina, KOSOVOThe paper examines the impact of agricultural credit on the productivity and income of Kosovo farms, a subsector that is characterized by restricted mechanization, extremely fragmented land ownership, and restricted access to finance. This paper uses a cross-section of a sample of 500 farmers from five Kosovo municipalities and different linear and hierarchical regression models to analyze the extent to which demographic variables, labor inputs, and credit access explain gross farm income. Further, the paper performs reliability testing in farmers' perceptions of credit constraints. Based on the findings, the study discovers that access to credit statistically and significantly affects income positively. As such, producers who have access to credit can gain, on average, €3,688 more than those producers without credit, given the other variables constant. Labor emerged as the pivotal variable of the income: one extra full-time worker raised the level of income by €6,892, and seasonal workers contributed €2,149. Further, the education and age factors were found to be statistically insignificant and hence cannot be said to have an impact on farm outcomes in the opposite direction. This means that real inputs like labor and capital heavily dominate over individual demographic factors in determining the outcomes of the farm. The test of reliability also indicated that collateral, high interest rates, and loan terms are being viewed as the most stringent obstacles to credit access with internal consistency (α = 0.889). These findings align with the broader literature that highlights the fact that loans are a productive source of farm productivity, but loan design as well as overall institutional arrangements are the principal drivers of the success of the latter. Due to this, access to finance needs to go hand in hand with advisory services at the farm level, financial education and awareness at the household level, and policy for dealing with structural issues of land fragmentation and lack of mechanization in Kosovan agriculture.924202592420251179118899https://wseas.com/journals/ead/2025/c025107-3434.pdf10.37394/232015.2025.21.99https://wseas.com/journals/ead/2025/c025107-3434.pdfVo, P.H., Ngo, T.Q. “The role of agricultural financing and development on sustainability: Evidence from Asian countries.” AgBioForum, Vol. 23, pp. 22–31, 2021. https://hdl.handle.net/10355/86781. Shkodra, J. “Financial performance of microfinance institutions in Kosovo.” Journal of International Studies, Vol. 12, No. 1, pp. 31–37, 2019. Houngbeme, A.B.L. “Access to loans and agricultural productivity: Evidence from maize producers in Benin.” Cogent Economics & Finance, Vol. 11, No. 1, pp. 1– 22, 2023. https://doi.org/10.1080/23322039.2023.21968 56. Shkodra, J., Shkodra, L. “Impact of agricultural finance in rural areas – case study Kosovo.” Bulgarian Journal of Agricultural Science, Vol. 24, No. 5, pp. 737– 741, 2018. André, B.F. “Analysis of factors influencing access to loans for vegetable farmers in the Gulf Prefecture of Togo.” Cairn.info, 2016. 10.3390/su12135488Pawlak, K., Kołodziejczak, M. “The role of agriculture in ensuring food security in developing countries: Considerations in the context of the problem of sustainable food production.” Sustainability, Vol. 12, No. 13, pp. 5488, 2020. https://doi.org/10.3390/su12135488. 10.1108/afr-01-2016-0002Abdallah, A.H. “Agricultural loans and technical efficiency in Ghana: is there a nexus?” Agricultural Finance Review, Vol. 76, No. 2, pp. 309–324, 2016. Asante, B.O. “Evaluating productivity gaps in maize production across different agroecological zones in Ghana.” Agricultural Systems, Vol. 176, pp. 102650, 2019. https://doi.org/2019.102650. 10.1108/afr-02-2017-0010Chandio, A.A. “Effects of agricultural loans on wheat productivity of small farms in Sindh, Pakistan: are short-term loans better?” Agricultural Finance Review, Vol. 78, No. 5, pp. 592–610, 2018. Nakano, Y., Tsusaka, T. “The impact of microloans on agricultural technology adoption and productivity: Evidence from a randomized control trial in Tanzania.” World Development, Vol. 133, pp. 104997, 2020. https://doi.org/10.1016/j.worlddev.2020.1049 97. 10.1080/1540496x.2019.1601080Seck, A. “Heterogeneous loans constraints and smallholder farming productivity in the Senegal River Valley.” Emerging Markets Finance and Trade, Vol. 57, No. 12, pp. 1–19, 2019. https://doi.org/10.1080/1540496X.2019.16010 80. Claessens, S., Feijen, E. “From loans to crops: New research suggests that better financial development can directly boost nourishment.” Finance and Development, Vol. 44, No. 2, pp. 35–37, 2007. Honohan, P. “Financial development, growth and poverty.” Financial Development and Economic Growth, Vol. 1, pp. 1–37, 2004. Liu, T.H., Huang, H., et al. “Inclusive finance, farm households entrepreneurship, and inclusive rural transformation in rural poverty-stricken areas in China.” Emerging Markets Finance and Trade, Vol. 57, No. 7, pp. 1929–1958, 2021. https://doi.org/10.1080/1540496X.2019.16945 0. 10.1093/wbro/lkl004Claessens, S. “Access to financial services: A review of the issues and public policy objectives.” World Bank Research Observer, Vol. 21, No. 2, pp. 207–240, 2006. Agbodji, A.E. “Agricultural loans and its impact on the productivity of certain cereals in Togo.” Emerging Markets Finance and Trade, Vol. 57, No. 12, pp. 1–17, 2019. https://doi.org/10.1080/1540496X.2019.16020 38. Diallo, M.F. “Effect of agricultural loans access on rice productivity: Evidence from the irrigated area of Anambe Basin, Senegal.” The Journal of Agricultural Science, Vol. 12, No. 3, pp. 78–88, 2020. https://doi.org/10.5539/jas.v12n3p78. Diamoutene, A.K. “Access to loans and maize productivity in Mali.” Agricultural Finance Review, Vol. 81, No. 3, pp. 458–477, 2020. https://doi.org/10.1108/AFR-05-2020-0066. Anh, N.T., Gan, C.G. “Does loan boost agricultural performance? Evidence from Vietnam.” International Journal of Social Economics, Vol. 47, No. 9, pp. 1203–1221, 2020. https://doi.org/10.1108/IJSE-04-2020- 0238. Rahman, S.H. “Impact of agricultural loans on agricultural productivity in Pakistan: an empirical analysis.” International Journal of Advanced Research in Management and Social Sciences, Vol. 3, No. 4, pp. 125–139, 2014. 10.17582/journal.sja/2016.32.3.184.191Saqib, S.A. “Access to loans and its adequacy to farmers in Khyber Pakhtunkhwa: The case of Mardan district.” Sarhad Journal of Agriculture, Vol. 32, No. 3, pp. 1–8, 2016. Yadav, I.S. “Agricultural loans and productivity of crops in India: Field evidence from small and marginal farmers across social groups.” Journal of Agribusiness in Developing and Emerging Economies, Vol. 13, No. 2, pp. 334–350, 2022. https://doi.org/10.1108/JADEE-05-2022- 0092. Johnson, A. “Agricultural loans and its impact on the productivity.” Emerging Markets Finance and Trade, Vol. 57, No. 12, pp. 1–17, 2019. https://doi.org/10.1080/1540496X.2019.16020 38. Njeru, T.N. “Role of access to loans in rice production in Sub-Saharan Africa: The case of Mwea irrigation scheme in Kenya.” Journal of African Economies, Vol. 25, No. 2, pp. 300–321, 2016. https://doi.org/10.1093/jae/ejv024. 10.1016/j.heliyon.2019.e01550Ali, E.A. “Loans constraints and soybean farmers’ welfare in subsistence farming.” Heliyon, Vol. 5, No. 3, e01550, 2019. https://doi.org/10.1016/j.heliyon.2019.e01550. Iqbal, E. “The impact of institutional loans on agricultural production in Pakistan.” The Pakistan Development Review, Vol. 42, No. 4, pp. 469–485, 2003. Udoka, C. “The effect of commercial banks’ loans on agricultural production in Nigeria.” Journal of Finance and Accounting, Vol. 4, No. 1, pp. 1–10, 2016. https://doi.org/10.12691/jfa-4-1-1. Ogbuabor, J.E. “The impact of deposit money bank’s agricultural loans on agricultural productivity in Nigeria.” International Journal of Economics and Finance, Vol. 10, No. 6, pp. 513–517, 2018.