Understanding the Determinants of Rural Credit Accessibility: The Case of Ehiaminchini, Fanteakwa District, Ghana

Gideon Baffoe and Hirotaka Matsuda

Journal of Sustainable Development, 2015, vol. 8, issue 6, 183

Abstract: Rural areas in developing countries are known to lack access to credit facilities. Lack of credit limits production activities and stifles agricultural productivity. The objective of this study is to identify the determinants of credit accessibility to more effectively aid alleviate poverty using Ehiaminchini, a village in the Fanteakwa District of Eastern Ghana as a case study. The study utilizes cross-sectional data collected with the use of structured questionnaires from 109 farm households. Interviews and focus group discussions were also conducted to supplement the data. A probit model was used to analyze the factors that determine households’ access to credit. The results show that livelihood diversification, household productivity, savings accounts and household size are factors that have a significant influence on households’ ability to access credit. Furthermore, the marginal effect of household productivity indicates that the predicted probability of accessing credit increases as productivity increases. We argue that improving household productivity and diversifying livelihoods in rural households will, to a large extent, address the problem of credit constraint.

Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:ibn:jsd123:v:8:y:2015:i:6:p:183

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