EFFECT OF CREDIT RATIONING ON THE PERFORMANCE OF SMALL-SCALE FARMERS IN NASARAWA STATE, NIGERIA

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dc.contributor.authorAKU, Emmanuel Maganie
dc.date.accessioned2021-08-23T09:07:25Z
dc.date.available2021-08-23T09:07:25Z
dc.date.issued2021-03
dc.descriptionA DISSERTATION SUBMITTED TO THE POSTGRADUATE SCHOOL, AHMADU BELLO UNIVERSITY, ZARIA IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR AWARD OF PHD DEGREE IN ECONOMICSen_US
dc.description.abstractAccess to credit has been identified as one of the key factors required to accelerate agricultural growth and improve welfare of rural dwellers in developing countries.The credit market serving agriculture in Nigeria is encumbered by operational and administrative inadequacies and the discriminatory tendencies of financial institutions. The government has implemented policies to redress the situation, but small-scale farmers have not benefitted from these incentives to any reasonable degree. This makes it imperative to examine the factors circumscribing loan demand and the various rationing mechanisms. This study examines the factors militating actual credit access and the various rationing mechanisms and the effect of credit rationing on farm household‘s productivity and investment. It seeks to (1) examine the nature of risks facing smallscale farmer-borrowers in Nasarawa State, (2) analyze the factors that affect access to credit of agricultural credit by farmers and highlight the key determinants of this access, (3) ascertain the extent to which farmers are credit rationed and the factors influencing the rationing and how the rationing affects both productivity and investment of the small scale farmers. The study employs primary data obtained from 592 small-scale farmers through a survey conducted in 2018 across the three senatorial regions of the state. Methodologically, the study extends the analysis of credit rationing beyond quantity rationing and presents explicit econometric models for analyzing the determinants of three types of credit rationing: quantity rationing, risk rationing, and price rationing. The logit and probit regression models are employed to ascertain the determinants of credit access and credit rationing respectively. The effect of credit rationing on farm household productivity and investments were also examined by identifying credit-rationed households based on direct elicitation of their credit-rationed status from survey questions about restrictions on credit and an endogenous regression model was used to analyse the effect of credit constraints on farm household performance. The results show that credit market access was significantly influenced, among other variables, by gender, monthly income, assets value, savings, repayment capacity and social capital, indicating that security and guarantee is the main criterion lenders use in granting credit. In other words, clients‘ credit risk profile plays a determining role in household credit accessibility. We used logit model for the access to credit equation and the probit regression model to estimate the determinants of households‘ credit rationed conditions. The results show that there is a higher probability that farmers will be rejected than that they will be given a loan amount lower than what was requested. It also shows that gender, age, land and asset ownership, strength of previous relationship and social capital are significant in determining whether a household is credit rationed. The effect of credit rationings on farm household productivity and investment were estimated and we found that gender, geographical location, and marital status have no statistically significant effect on the probability that farmers will be quantity rationed. The effect of credit rationing on household productivity and investment which was estimated show that credit rationed households have lower productivity and even investment compared to the unrationed households. The results presented in this study therefore support the claims that credits have an important role to play in rural farm production and additional rural finance can enhance productivity and farm household investment, thus contributing to agricultural sector development. To address the credit rationing challenges and improve demand for loans by smallscale farmers, it is recommended that government and banks should mobilize resources and establish loan-monitoring committees at the grassroots level to serve as insurance against the risk of loan default.en_US
dc.identifier.urihttp://hdl.handle.net/123456789/12537
dc.language.isoenen_US
dc.subjectEFFECT,en_US
dc.subjectCREDIT RATIONING,en_US
dc.subjectPERFORMANCE,en_US
dc.subjectSMALL-SCALE FARMERS,en_US
dc.subjectNASARAWA STATE,en_US
dc.subjectNIGERIAen_US
dc.titleEFFECT OF CREDIT RATIONING ON THE PERFORMANCE OF SMALL-SCALE FARMERS IN NASARAWA STATE, NIGERIAen_US
dc.typeThesisen_US
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