Impact of credit access of farmers in cooperative societies on financial performance: the predictive effect of financial literacy

Purpose - The goal of this study was to determine the impact of access to credit facilities on financial performance among farmers of cooperative societies. The study also tested the predictive power of financial literacy. Design/methodology/approach - The descriptive survey research design was used for the study while the sample size was 240 farmers of cooperative societies from South-East Nigeria. The farmers were categorised into those with access to credit facilities and those without access to credit facilities. A structured questionnaire was used to collect data for the study. Data were analysed using multiple analyses of variance (MANOVA) and multiple regression analysis. Findings - Farmers with access to credit facilities reported higher financial performance such as return on investment, working capital, net profit, profit margin and sales. However, those without access to credit facilities reported lower mean scores on financial performance. Also, financial literacy, like financial knowledge, attitude and awareness, significantly predicts the impact of access to credit facilities on financial performance. It was also found that the duration of repayment of credit facilities, like medium and long term, contributes more to improving financial performance. Originality/value - This study has shown that even though access to credit facilities impacts financial performance, financial literacy is an important consideration. Also, the duration of repayment is a crucial factor.