Factors determining cassava farmers’ accessibility to loan sources: Evidence from Lampung, Indonesia

Abstract

Credit accessibility is crucial for sustainable agricultural development. However, the difficulty in accessing credit has caused farmers to take many considerations when taking a loan. This research aims to determine the factors determining access and credit sources for cassava farmers in Lampung Province, Indonesia. Central Lampung was chosen as the research location because it had a total cassava production share of 36%. This study used Isaac’s and Michael’s formulae to determine the total samples. The data were collected by interviewing 263 respondents. Of 263 farmers, only 109 (41.4%) had access to loans. Data were analysed using the Multinomial Logit Regression Model to examine the factors determining access and credit sources for cassava farmers. Marginal effect analysis was also used to determine the probability of changes in independent variables. Regression results showed that the type of credit sources chosen by the farmers was determined by age, income, agribusiness experience, land size, education, organisation membership, and credit experience (R 2 = 89.1%). Partially, age, income, land size, education, credit experience, and business experience significantly influence the funding source. The results indicate that age, agribusiness experience, and land size are the main factors in choosing the types of credit. Land size has the biggest positive influence on farmers’ access to formal banks (11.49%).