Rural Households Banking and Financial Behaviours in Ekiti State, Nigeria

Abstract

Rural households are faced with various banking methods, but they prefer the informal (unorganized) banking methods, where they source for finance to aid their farming activities and general family wellbeing. This necessitated the study of the financial and banking behaviours among rural households in Ekiti State. One hundred and twenty respondents were randomly selected in the study area. Descriptive statistics was used to ascertain the socio-economic characteristics of rural households while probit regression was used to analyse the relationship between the socio-economic characteristics and the choice of banking methods. The results showed that the mean age was 48.9 years while the minimum and maximum ages were 21 and 85 years respectively. Also, the majority of the respondents were women and had large household size. As a State known as fountain of knowledge, high literacy rate was recorded among the respondents. Most (48.4%) of them took trading as primary occupation while few of them were primarily into farming. The main method of banking in the area was the daily money collectors (Alajos). It was recorded that rural households had low savings with the conventional banks.  From the probit analysis, it was gathered that the determinants of the choice of banking method in the study area were household size, years of formal education, amount saved with the conventional banks and Income. It was recommended that, in order to enable rural households make use of conventional banks, proper and adequate awareness was advocated. Also, government should invest more on infrastructural facilities especially power supply, to enable the conventional banks extend their services to rural areas.

Key words: Rural, households, informal banking methods, socio-economic characteristics.