IDEAS home Printed from https://ideas.repec.org/p/ags/aaae10/95775.html
   My bibliography  Save this paper

Determinants of Credit Constraint Conditions and Production Efficiency Among Farming Households in Southwestern Nigeria

Author

Listed:
  • Omonona, Bolarin T.
  • Lawal, Justina Oluwayemisi
  • Oyinlana, A.O.

Abstract

Sustaining and improving production efficiency of resource poor smallholder farmers under the existing credit constraint conditions require the improvement of access to credit facilities and other factors involved. The study examined the factors influencing credit constraint (CC) and production efficiency of farming households in Oyo State, Nigeria. Primary data was randomly collected using structured questionnaire from 120 mixed farmers in the study area. Data was analyzed using descriptive analysis, probit regression and stochastic frontier analysis. The results shows that 79.2 percent of the respondents were credit constrained and this has negative influence on their production efficiency as credit constrained farming households (CCFH) were found to be less efficient with mean efficiency of 0.721 than unconstrained farming households with 0.913. Age, gender, education, and dependency ratio of farmers are significant variables that influenced credit constraint conditions of the farmers while the maximum likelihood estimate of the production frontier revealed that farm size, labour and quantity of agro-chemical used are positively and significantly related to the production efficiency of farmers. Given the largest proportion of CCFHs among farming population in South-Western Nigerian, this gap implies considerable potential loss in output due to inefficient production. Improving credit access of farming households in general but more particularly the CCFHs is desirable for higher production efficiency.

Suggested Citation

  • Omonona, Bolarin T. & Lawal, Justina Oluwayemisi & Oyinlana, A.O., 2010. "Determinants of Credit Constraint Conditions and Production Efficiency Among Farming Households in Southwestern Nigeria," 2010 AAAE Third Conference/AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa 95775, African Association of Agricultural Economists (AAAE).
  • Handle: RePEc:ags:aaae10:95775
    DOI: 10.22004/ag.econ.95775
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/95775/files/15.%20Determinants%20of%20credit%20constraints%20in%20southwestern%20Nigeria.pdf
    Download Restriction: no

    File URL: https://libkey.io/10.22004/ag.econ.95775?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Diagne, Aliou & Zeller, Manfred & Sharma, Manohar, 2000. "Empirical measurements of households' access to credit and credit constraints in developing countries," FCND briefs 90, International Food Policy Research Institute (IFPRI).
    2. Catherine Guirkinger & Stephen R. Boucher, 2008. "Credit constraints and productivity in Peruvian agriculture," Agricultural Economics, International Association of Agricultural Economists, vol. 39(3), pages 295-308, November.
    3. Barry, Peter J. & Robison, Lindon J., 2001. "Agricultural finance: Credit, credit constraints, and consequences," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 10, pages 513-571, Elsevier.
    4. Maqbool Sial & Michael Carter, 1996. "Financial market efficiency in an Agrarian economy: Microeconometric analysis of the Pakistani Punjab," Journal of Development Studies, Taylor & Francis Journals, vol. 32(5), pages 771-798.
    5. Carter, Michael R., 1989. "The impact of credit on peasant productivity and differentiation in Nicaragua," Journal of Development Economics, Elsevier, vol. 31(1), pages 13-36, July.
    6. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-332.
    7. Eswaran, Mukesh & Kotwal, Ashok, 1990. "Implications of Credit Constraints for Risk Behaviour in Less Developed Economies," Oxford Economic Papers, Oxford University Press, vol. 42(2), pages 473-482, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Fadoju, Dorcas Tolulope & Felicia Adesiyan, Oluwafunmilola & Adeomi, Damilola Toluse, 2022. "Credit Constraints in Farm Households in South West Nigeria: Nature and Determinants," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 10(4), October.
    2. Yusuf Ibrahim Kofarmata & Abubakar Hamid Danlami, 2021. "A micro-level analysis of the intensity of agricultural finance supply in Nigeria: empirical evidence," SN Business & Economics, Springer, vol. 1(1), pages 1-17, January.
    3. 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.
    4. Jiang Du & Miao Zeng & Zhengjuan Xie & Shikun Wang, 2019. "Power of Agricultural Credit in Farmland Abandonment: Evidence from Rural China," Land, MDPI, vol. 8(12), pages 1-14, December.
    5. Biyase Mduduzi & Fisher Bianca, 2017. "Determinants of Access to Formal Credit by the Poor Households," Studia Universitatis Babeș-Bolyai Oeconomica, Sciendo, vol. 62(1), pages 50-60, April.
    6. Jane Musole Kwenye & Xiaoting Hou Jones & Alan Renwick, 2023. "Understanding Land-Use Trade-off Decision Making Using the Analytical Hierarchy Process: Insights from Agricultural Land Managers in Zambia," Land, MDPI, vol. 12(3), pages 1-19, February.
    7. Danuta Zawadzka & Agnieszka Strzelecka & Ewa Szafraniec-Siluta, 2021. "Debt as a Source of Financial Energy of the Farm—What Causes the Use of External Capital in Financing Agricultural Activity? A Model Approach," Energies, MDPI, vol. 14(14), pages 1-17, July.
    8. Adewale Isaac Olutumise, 2023. "Impact of credit on the climate adaptation utilization among food crop farmers in Southwest, Nigeria: application of endogenous treatment Poisson regression model," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 11(1), pages 1-19, December.
    9. Grace Denny Doku & Joyce Mamle Mawusi Obubuafo & Margaret Aba Sam Hagan, 2020. "Access to Credit by Smallholder Female Farmers in Ho Municipality, Ghana," World Journal of Business and Management, Macrothink Institute, vol. 6(1), pages 17-37, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Unal Seven & Semih Tumen, 2020. "Agricultural Credits And Agricultural Productivity: Cross-Country Evidence," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 65(supp01), pages 161-183, December.
    2. Ali, Daniel Ayalew & Deininger, Klaus & Duponchel, Marguerite, 2014. "Credit constraints, agricultural productivity, and rural nonfarm participation : evidence from Rwanda," Policy Research Working Paper Series 6769, The World Bank.
    3. Mukasa Adamon N. & Anthony M. Simpasa & Adeleke Oluwole Salami, 2017. "Working Paper 247 - Credit constraints and farm productivity: Micro-level evidence from smallholder farmers in Ethiopia," Working Paper Series 2356, African Development Bank.
    4. Sial, Maqbool Hussain & Awan, Masood Sarwar & Waqas, Muhammad, 2011. "Role of Institutional Credit on Agricultural Production: A Time Series Analysis of Pakistan," MPRA Paper 31815, University Library of Munich, Germany.
    5. Collins Asante-Addo & Jonathan Mockshell & Manfred Zeller & Khalid Siddig & Irene S. Egyir, 2017. "Agricultural credit provision: what really determines farmers’ participation and credit rationing?," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 77(2), pages 239-256, July.
    6. Diana Fletschner & Catherine Guirkinger & Steve Boucher, 2010. "Risk, Credit Constraints and Financial Efficiency in Peruvian Agriculture," Journal of Development Studies, Taylor & Francis Journals, vol. 46(6), pages 981-1002.
    7. Yusuf Ibrahim Kofarmata & Shri Dewi Applanaidu & Sallahuddin Hassan, 2016. "Determinants of Demand for Credit: A Conceptual Review," Asian Journal of Economics and Empirical Research, Asian Online Journal Publishing Group, vol. 3(1), pages 6-10.
    8. T. O. Ojo & A. A. Ogundeji & S. C. Babu & T. Alimi, 2020. "Estimating financing gaps in rice production in Southwestern Nigeria," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 9(1), pages 1-18, December.
    9. Qi Zhou & Xiangfeng Chen & Shuting Li, 2018. "Innovative Financial Approach for Agricultural Sustainability: A Case Study of Alibaba," Sustainability, MDPI, vol. 10(3), pages 1-20, March.
    10. Simtowe, Franklin & Zeller, Manfred, 2006. "The Impact of Access to Credit on the Adoption of hybrid maize in Malawi: An Empirical test of an Agricultural Household Model under credit market failure," MPRA Paper 45, University Library of Munich, Germany.
    11. Liu, Zinan & Zhuang, Juzhong, 2000. "Determinants of Technical Efficiency in Post-Collective Chinese Agriculture: Evidence from Farm-Level Data," Journal of Comparative Economics, Elsevier, vol. 28(3), pages 545-564, September.
    12. Meilin Ma & Richard J. Sexton, 2021. "Modern agricultural value chains and the future of smallholder farming systems," Agricultural Economics, International Association of Agricultural Economists, vol. 52(4), pages 591-606, July.
    13. Franklin Simtowe & Manfred Zeller & Aliou Diagne, 2009. "The impact of credit constraints on the adoption of hybrid maize in Malawi," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement, INRA Department of Economics, vol. 90(1), pages 5-22.
    14. Chloé Duvivier, 2013. "Does Urban Proximity Enhance Technical Efficiency? Evidence From Chinese Agriculture," Journal of Regional Science, Wiley Blackwell, vol. 53(5), pages 923-943, December.
    15. repec:ebl:ecbull:v:15:y:2006:i:12:p:1-8 is not listed on IDEAS
    16. Villalba, Roberto & Venus, Terese E. & Sauer, Johannes, 2023. "The ecosystem approach to agricultural value chain finance: A framework for rural credit," World Development, Elsevier, vol. 164(C).
    17. Diagne, Aliou, 1998. "Impact of access to credit on income and food security in Malawi," FCND discussion papers 46, International Food Policy Research Institute (IFPRI).
    18. Jiang Du & Miao Zeng & Zhengjuan Xie & Shikun Wang, 2019. "Power of Agricultural Credit in Farmland Abandonment: Evidence from Rural China," Land, MDPI, vol. 8(12), pages 1-14, December.
    19. Catherine Guirkinger & Stephen R. Boucher, 2008. "Credit constraints and productivity in Peruvian agriculture," Agricultural Economics, International Association of Agricultural Economists, vol. 39(3), pages 295-308, November.
    20. Martin Petrick, 2005. "Empirical measurement of credit rationing in agriculture: a methodological survey," Agricultural Economics, International Association of Agricultural Economists, vol. 33(2), pages 191-203, September.
    21. Koomson, Isaac & Annim, Samuel Kobina & Peprah, James Atta, 2014. "Loan Refusal, Household Income and Savings in Ghana," MPRA Paper 58049, University Library of Munich, Germany.

    More about this item

    Keywords

    Agricultural Finance;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aaae10:95775. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaaeaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.