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Determinants of Agro-Dealers’ Participation in the Loan Market in Nigeria

Aderibigbe S. Olomola

International Food and Agribusiness Management Review, 2014, vol. 17, issue 3, 20

Abstract: Agro-dealership financing deserves policy attention if agro-dealers are to contribute to the success of the ongoing agricultural transformation in Nigeria. Thus, this study seeks to (i) examine the issues influencing the decisions of agro-dealers to participate in the loan market, (ii) analyze the demand for business loan by the agro-dealers and (iii) articulate policy measures for sustainable financing of agro-input business enterprises in Nigeria. The study employed primary data collected through structured questionnaires from 300 agro-dealers and used a Tobit type-II model for the analysis. The results show that interest rate, debt, value of asset, membership of trading association and source of credit are major determinants of loan demand. Agro-dealers need to organize themselves into input trading associations to enhance their creditworthiness and unleash the inherent social capital and information advantages for improved agro-dealership financing. Moreover, diversification of product coverage by agro-dealers and a value-chain approach that links internal financing in the form of trade credit within the agro-input sector with external financing from the commercial banks are strongly recommended.

Keywords: Agribusiness; Agricultural Finance; Demand and Price Analysis; Farm Management; International Development; Land Economics/Use; Political Economy; Risk and Uncertainty (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:ags:ifaamr:183449

DOI: 10.22004/ag.econ.183449

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