Credit Constraints in Farm Households in South West Nigeria: Nature and Determinants

Dorcas Fadoju, Oluwafunmilola Felicia Adesiyan and Damilola Toluse Adeomi

International Journal of Food and Agricultural Economics (IJFAEC), 2022, vol. 10, issue 4

Abstract: This study examined credit constraints in farm households in Southwest Nigeria. Multistage sampling technique was employed for the study. Direct elicitation approach and multinomial logit model was applied on the primary data collected in the study area. The results showed that 30.94% of the households were credit unconstrained while the remaining 69.06% were credit constrained with Quantity, Risk and Transaction cost constraints accounting for 17.81%, 21.25% and 30% respectively. The multinomial logit result showed that repayment capacity, repayment history (payment of last loan back), land ownership reduces the probability of the household to be risk constrained while access to extension service increases it. The sex of the household head, off farm income, repayment history will reduce the chance of the household being transaction cost constrained while access to extension service, dependency ratio, will increase the likelihood of the household to be transaction cost constrained. In addition, the coefficients of off farm income, repayment history (payment of last loan back), and land ownership were negative and statistically significant in determining the chance of the household being quantity constrained and a unit increase in them will reduce the likelihood of household being quantity constrained. While access to extension service and repayment capacity, is positive and statistically significant and therefore, an increase in them will increase the chance of the household to be quantity constrained.

Keywords: Agricultural and Food Policy; Agricultural Finance; Community/Rural/Urban Development; Consumer/Household Economics; Demand and Price Analysis; Farm Management; Political Economy (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:ags:ijfaec:329630

DOI: 10.22004/ag.econ.329630

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