Agricultural Credit Rationing in Ghana: What do Formal Lenders look for?. Issue 3 (19th August 2014)

• Record Type: Journal Article
• Authors: Awunyo-Vitor, Dadson; Al-Hassan, Ramatu Mahama; Bruce Sarpong, Daniel; Egyir, Irene
• Editors: Turvey, CalumG; Turvey, CalumG
• Is Part Of: Agricultural finance review. Volume 74:Issue 3(2014)
• Publication Date: 2014-08-19
• Subjects: Agriculture -- Finance -- Periodicals; Agriculture -- Finance -- Statistics -- Periodicals; Agricultural insurance -- Periodicals; Agriculture -- Taxation -- Periodicals; 332.71
• DOI: 10.1108/AFR-01-2013-0004
• Languages: English
• ISSNs: 0002-1466

Abstract

Abstract : Purpose: Purpose- The purpose of this paper is to investigate the determinants of agricultural credit rationing by formal lenders in Ghana. Design/methodology/approach: Design/Methodology/Approach- This study employed Descriptive statistics, Analysis Of Variance (ANOVA) and Heckman's two stage regression model to identify types of rationing faced by farmers and investigate factors that influence agricultural credit rationing by formal financial institutions. Data used in this study is gathered through a survey of 595 farmers in seven districts within Brong Ahafo Region of Ghana. Findings: Findings- The result reveals that farmers face three types of rationing. Evidence from the Heckam two stage models shows that engagement in off farm income generating activities, increase in farm size, positive balances on accounts and commercial orientation of the farmers has the potential to reduce rationing of credit applicants by formal lenders Practical implications: Practical Implication- The results provide information on the factors that need to be considered as important in an attempt to reduce agricultural credit rationing by formal lenders Originality/value: Originality and value- The value of this study is that farmers would use the results of this study to improve access to required amount of agricultural credit from formal financial institutions. The information would also benefit stakeholders in the agricultural sector, particularly youth in agriculture programme organised by Ministry of Food and Agriculture (MoFA) in Ghana as how to improve access to credit and reduce rationing of programme participants by formal financial institutions.