Credit Constraint and Rural Household Welfare in the Mezam Division of the North-West Region of Cameroon

Louis Atamja and Sungjoon Yoo
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Louis Atamja: College of Agricultural and Resource Economics, Kangwon National University, Chuncheon 24341, Korea
Sungjoon Yoo: Department of International Business & Trade, Kyung Hee University, Seoul 02447, Korea

Sustainability, 2021, vol. 13, issue 11, 1-19

Abstract: The purpose of this study is to examine the effect of the rural household’s head and household characteristics on credit accessibility. This study also seeks to investigate how credit constraint affects rural household welfare in the Mezam division of the North-West region of Cameroon. Using data from a household survey questionnaire, we found that 36.88% of the households were credit-constrained, while 63.13% were unconstrained. A probit regression model was used to examine the determinants of households’ credit access, while an endogenous switching regression model was used to analyze the impact of credit constraint on household welfare. The results from the probit regression model indicate the importance of the farmer’s or trader’s organization membership, occupation, and savings to the household’s likelihood of being credit-constrained. On the other hand, a prediction from the endogenous switching regression model confirms that households with access to credit have a better standard of welfare than a constrained household. From the results, it is necessary for the government to subsidize microfinance institutions, so that they can take on the risk of offering credit to rural households.

Keywords: Cameroon; credit constraint; rural household; endogenous switching model; welfare (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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