An Analysis of Farmers' Access to Formal Credit in the Rural Areas of Nigeria

Research Paper (undergraduate) from the year 2011 in the subject Economics - Other grade: none Usmanu Danfodiyo University Sokoto (School of Arts and Social Sciences) course: Economics language: English abstract: This study examines the factors that influence Farmers access to formal banking credit in the rural areas of Nigeria. The data used was collected from rural areas of Katsina State. The study used probit modelling approach to analyse the factors that influence farmers' accessibility to formal credit. The study found that the level of income collateral educational attainment and marital status have significant positive influence on farmers' access to formal credit while age and sex have insignificant positive influence on the farmers' access to credit. On the other hand interest rate and transaction cost have significant negative influence on the farmers' access to formal credit. Thus the paper concluded that with the prevailing banking arrangement in Nigeria rural farmers have little or no access to credit from conventional banks. Therefore the study recommended the use of both group lending arrangement and character lending so that farmers in the rural areas could be reached with formal credit.