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Estimation of the Determinants of Credit Demand by Farmers and Supply by Rural Banks in Ghana’s Upper East Region

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  • M. A Akudugu

Abstract

Credit is a strategic empowerment tool that has the potential to change the life of a person, family or community from a situation of abject poverty to a more dignified life. It can transform self-image, unlock potential and boost the productivity and well-being of the poor and vulnerable, especially farmers. This paper estimates the determinants of credit demand by farmers and supply by Rural Banks in the Upper East Region of Ghana. Semi-structured questionnaire complimented by key informant interviews and focus group discussions were used in gathering data from 250 farmers in 5 districts of Upper East Region. The logit model was used to estimate the determinants of credit demand by farmers and the Tobit model used to estimate the determinants of credit supply by Rural Banks. The findings showed that age of farmers, gender and political affiliations among others are the main determinants of credit demand by farmers. Type of crop grown, farm size and the amount of savings made are some determinants of credit supply by the Rural Banks. It is concluded that demand for credit by farmers and supply of it by Rural Banks in Ghana’s Upper East Region are determined by socio-economic and politico-cultural factors. It is recommended that government; the Bank of Ghana and the Rural Banks themselves should develop strategies that aim at enhancing the positive determinants of credit demand and supply and mitigating the negative ones to ensure credit widening and deepening among farmers.

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  • M. A Akudugu, 2012. "Estimation of the Determinants of Credit Demand by Farmers and Supply by Rural Banks in Ghana’s Upper East Region," Asian Journal of Agriculture and Rural Development, Asian Economic and Social Society, vol. 2(2), pages 189-200.
    • Handle: RePEc:asi:ajosrd:v:2:y:2012:i:2:p:189-200:id:543
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    1. Abbas Ali Chandio & Yuansheng Jiang & Abdul Rehman & Waqar Akram, 2021. "Does Formal Credit Enhance Sugarcane Productivity? A Farm-Level Study of Sindh, Pakistan," SAGE Open, , vol. 11(1), pages 21582440209, January.
    2. Shuangming Yin & Xiaojuan Chen & Xiangyu Zhou & Chao Chen & Jianxu Liu, 2023. "Effect of Micro-Credit for Poverty Alleviation on Income Growth and Poverty Alleviation—Empirical Evidence from Rural Areas in Hebei, China," Agriculture, MDPI, vol. 13(5), pages 1-17, May.
    3. Olomola, Aderbigbe & Gyimah-Brempong, Kwabena, 2014. "Loan demand and rationing among small-scale farmers in Nigeria:," IFPRI discussion papers 1403, International Food Policy Research Institute (IFPRI).
    4. Hamam, Manal & Spina, Daniela & Selvaggi, Roberta & Vindigni, Gabriella & Pappalardo, Gioacchino & D’Amico, Mario & Chinnici, Gaetano, 2023. "Financial sustainability in agri-food supply chains: A system approach," Economia agro-alimentare / Food Economy, Italian Society of Agri-food Economics/Società Italiana di Economia Agro-Alimentare (SIEA), vol. 25(2), October.
    5. Manal Hamam & Daniela Spina & Roberta Selvaggi & Gabriella Vindigni & Gioacchino Pappalardo & Mario D'Amico & Gaetano Chinnici, 2023. "Financial sustainability in agri-food supply chains: A system approach," Economia agro-alimentare, FrancoAngeli Editore, vol. 25(2), pages 135-154.
    6. Joseph Chisasa, 2016. "Determinants of the demand for credit by smallholder farmers: survey results from South Africa," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 9(1), pages 26-46.
    7. Samuel Monteiro, 2020. "The impact of the formal employment contract on credit access in Africa," Working Papers hal-02493388, HAL.
    8. Akudugu, M. A., 2018. "The Relative Importance of Credit in Agricultural Production in Ghana: Implications for Policy and Practice," 2018 Conference (2nd), August 8-11, Kumasi, Ghana 277794, Ghana Association of Agricultural Economists.
    9. T. O. Ojo & L. J. S. Baiyegunhi, 2020. "Determinants of credit constraints and its impact on the adoption of climate change adaptation strategies among rice farmers in South-West Nigeria," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 9(1), pages 1-15, December.
    10. Johannes I. F. Henning & Henry Jordaan, 2016. "Determinants of Financial Sustainability for Farm Credit Applications—A Delphi Study," Sustainability, MDPI, vol. 8(1), pages 1-15, January.
    11. Ukoha, Igwe. Ikenna & Mejeha, Remy & Nwaru, Jude & Ibeagwa, Okwudili & Maduike, Iifeanyi, 2020. "Explicating the Prevalence of Women Farmers’ Deterrence from Microfinance Banks Loans in South-East Nigeria: A Censored Tobit Regression Model of Analysis," International Journal of Applied Economics, Finance and Accounting, Online Academic Press, vol. 7(2), pages 82-89.
    12. Djoumessi, Yannick F. & Kamdem, Cyrille B. & Afari-sefa, Victor & Bidogeza, Jean-Claude, 2018. "Determinants of Smallholder Vegetable Farmers Credit Access and Demand in Southwest region, Cameroon," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 38(2), pages 1231-1240.
    13. Ta Nhat Linh & Dang Anh Tuan & Phan Thu Trang & Hoang Trung Lai & Do Quynh Anh & Nguyen Viet Cuong & Philippe Lebailly, 2020. "Determinants of Farming Households’ Credit Accessibility in Rural Areas of Vietnam: A Case Study in Haiphong City, Vietnam," Sustainability, MDPI, vol. 12(11), pages 1-16, May.
    14. Victor Afari-Sefa & Jean Claude Bidogeza & Yannick Djoumessi & Cyrille Kamdem, 2018. "Determinants of Smallholder Vegetable Farmers Credit Access and Demand in Southwest region, Cameroon," Economics Bulletin, AccessEcon, vol. 38(2), pages 1231-1240.
    15. Dimaviya Eugène Compaore & Boukaré Maiga, 2024. "Socio-Economic Determinants of the Financial Inclusion of Women and Men in Burkina Faso: An Analysis using the Sequential Logit Model," International Journal of Economics and Financial Issues, Econjournals, vol. 14(3), pages 48-56, May.
    16. Dolapo Adeyanju & John Mburu & Djana Mignouna, 2021. "Youth Agricultural Entrepreneurship: Assessing the Impact of Agricultural Training Programmes on Performance," Sustainability, MDPI, vol. 13(4), pages 1-11, February.

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    Keywords

    Credit; Farmers; Ghana; Logit; Rural Banks;
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