This paper uses a nationally representative sample of agricultural businesses in Tanzania to
empirically investigate the determinants of credit constraint status and its impact on
agricultural productivity. In particular, we directly elicit the nature of the credit constraints
experienced by crop producers. Subsequently, we evaluate the effect on crop output value per
hectare using an endogenous switching regression model, which simultaneously estimates the
likelihood of being credit constrained and its impact on productivity. The results provide
evidence that the relaxation of all credit constraints would significantly enhance agricultural
productivity; hence, contributing favourably to rural development, poverty alleviation, and
the improvement of living standards in Tanzania. Moreover, consideration of only quantity
constraints was shown to underestimate the full impact of credit constraint status in the
presence of transaction costs and risk constraints. We advocate for the Tanzanian agricultural
policy framework to adopt a broader definition of credit constraint status in pursuit of
agricultural and economic development.