Determinants of demand for credit by smallholder farmers': a farm level analysis based on survey in Sindh, Pakistan

Abbas Ali Chandio, Yuansheng Jiang, Abdul Rehman, Martinson Ankrah Twumasi, Amber Gul Pathan and Muhammad Mohsin

Journal of Asian Business and Economic Studies, 2020, vol. 28, issue 3, 225-240

Abstract: Purpose - In the developing countries, formal credit has dominant role for the development of agriculture sector. It increases the farmer's purchasing power for better farm inputs and agricultural technology for high crop productivity. The main purpose of this study is to examine the influence of socioeconomic characteristics of smallholder farmers for credit demand in Sindh, Pakistan. Design/methodology/approach - A cross-sectional data set randomly collected from 90 smallholder farmers in Thatta district, Sindh, Pakistan, is examined. Descriptive statistics, correlation and the OLS regression method were used to demonstrate the important factors affecting the demand for formal credit. Findings - The results revealed that formal education, experience of farming, landholding size, road access and extension contacts positively and significantly influenced the demand for formal credit. Originality/value - This study is the first, to the best of authors' knowledge, to demonstrate the influence of various socioeconomic characteristics of smallholder farmers on demand for formal credit in Sindh, Pakistan. It also illustrates the imperative contribution to the literature regarding credit access and demand to improve the agricultural productivity.

Keywords: Determinants; Demand for credit; OLS approach; Pakistan; O13; Q14; Q18 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jabesp:jabes-01-2020-0004

DOI: 10.1108/JABES-01-2020-0004

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