Endogeneity of Social Capital and Agricultural Market Outcomes Among Smallholder Farmers in South East Nigeria: A Structural Analysis

Social capital has been extensively theorised as a determinant of agricultural market participation and market outcome quality for smallholder farmers, yet endogeneity concerns in the social capital-market outcome relationship have not been adequately addressed in the existing Nigerian smallholder literature. In South East Nigeria, dense community-level social networks and cooperative institutions provide an important empirical context for structural analysis of this relationship. This study conducted a structural analysis of the endogeneity of social capital and its effects on agricultural market outcomes among smallholder farmers in South East Nigeria using primary data from 430 farming households across Anambra, Enugu, and Abia States. Social capital was operationalised across cognitive, structural, and linking dimensions. An instrumental variables strategy exploiting historical community-level trust variation and a structural simultaneous equations framework were combined to identify causal effects. Agricultural market outcomes included market channel diversity, price realisation, and transaction cost measures. Results demonstrated significant bidirectional endogeneity between linking social capital and market outcome quality, revealing that participation in high-performing markets itself generates social capital accumulation. Cognitive social capital had the strongest causal effect on price realisation, mediated through information sharing and collective bargaining. The study makes an original methodological contribution to the social capital-agricultural market literature, providing an identified structural framework applicable to other smallholder contexts. Keywords: social capital, endogeneity, agricultural markets, South East Nigeria, structural analysis.