Determinants Of Agricultural Credit Supply To Farmers In The Niger Delta Area Of Nigeria

Abstract

For effective administration of agricultural credit, financial institutions while granting credit to farmers for agricultural purposes consider a number of factors. This paper focused on the evaluation of the critical factors that are considered by financial institutions in disbursement of credit to farmers in the Niger Delta area of Nigeria. Data for this study was collected from 20 formal and informal financial institutions operating in the study area. They were randomly selected and structured questionnaires were administered to them and interview schedule. The determinants of credit supply for agricultural purposes were found to be profitability of the investment, level of assets of the farmer-borrower interest rate, availability of credit, loan transaction costs, and level of risk bearing. Results show that the availability of credit was considered an extremely important factor in the supply of agricultural credit to farmers. However transaction costs was observed to be the least important factor considered by financial institutions in order to supply credit to farmer sin Niger Delta area of Nigeria

Impact of international donor organizations intervention on agricultural banking in Africa: Micro analyses

“…As already mentioned availability of credit is also considered as crucial factor for agricultural lending that was analyzed in the paper of Okerenta and Orebiyi (2005). Paper assessed the crucial factors that are taken into account by financial institutions in provision of credit to farmers in the observed area of Nigeria.…”

“…Donors were assisting several banks in Africa to pave the way in untapped agriculture market. As Okerenta and Orebiyi, (2005) state that availability of credit is also considered to be extremely important factor in agricultural lending provision by banks. Most banks there were experiencing problems with relevant resources to enhance agricultural credit portfolio.…”

Is Rationing in the Microfinance Sector Determined by the Microfinance Type? Evidence from Ghana

“…This situation therefore calls for an empirical estimation to determine the extent to which loan, firm and borrower characteristics determine the access to credit and rationing of credit in microfinance and the extent to which institutional factors influence the rationing and credit access. Various researchers have reached the conclusion that credit rationing exists in most developing countries even in the face of interest rate liberalization (Okerenta et al, 2005;Rahji et al, 2009;Zeller, 1994;Zeller et al, 2002).…”

“…They observed that human capital (education and age) as well as wealth and risk-bearing indicators (distance from the house to the road) were significant in determining credit constraints. Using a sample of 290 borrowers from 20 formal and informal financial institutions operating in the Niger Delta of Nigeria, Okerenta and Orebiyi (2005) found that access to credit was determined by the profitability level, value of assets and interest rates and that the higher these were, the less likelihood there was of being denied access to credit. Similarly, in determining access to credit and the loan amount, using the Fourth Round Ethiopian Urban Survey involving 1,500 households for the 2000 period, Kedir (2000) observed that the geographical location, value of assets, value of collateral, number of dependents and marital status as well as outstanding debts were significant factors determining credit rationing.…”