This study examines the effect of microcredit on the technical efficiency of paddy production in the Anuradhapura district of Sri Lanka using the Cobb-Douglas stochastic frontier analysis. The study employed non-probability sampling techniques to select a sample of 60 farmers consisting of both microcredit borrowers and non-borrowers. The results revealed that the average technical efficiency of the considered paddy farmers was 89%, implying that farmers have the potential to increase their paddy productivity by 11%. Farm inputs such as land extent (p<0.05), seed paddy quantity (p<0.05), and agrochemical costs (p<0.1) showed a significant effect on paddy productivity. Agricultural experience (p<0.05), education level, extension services, and use of microcredit (p<0.1) showed a positive impact on paddy farmers’ technical efficiency. The majority of selected farmers (85%) obtained small loans of up to LKR 100,000 for their production, with 57% using only formal credit and 40% using only informal credit. However, there was no significant difference (p>0.05) in terms of production efficiency between formal and informal credit access. The results also showed evidence of constant returns to scale. Effective and well-functioning extension services, training to improve the managerial capacity of farmers, and the provision of micro-credit improve the efficiency of paddy production. The findings of this study emphasize the importance of providing agricultural credit facilities to farmers.