Determinants of Smallholder Farmers Loan Repayment Performance in Assosa District, Western Ethiopia

Abstract

There are a lot of options to deliver financial services to the rural poor. The aim of this study is to analyze determinants of loan repayment performance of smallholder farmers in a special reference Assosa woreda. Purposive sampling technique was used to select sample kebele. For this study a total of 1571households’ credit users and from these 94 households were selected randomly followed by probability proportional sample from Assosa woreda’. Both primary and secondary data were collected for this study. Primary data were collected by direct interview of sample respondents; whereas, secondary data were also collected from published and unpublished documents. Descriptive statistics were used to summarize the demographic profile of the respondent. And, logistic regression model was employed to identify factors influencing loan repayment performance of farmers. Out of the total thirteen explanatory variables included in the model, livestock ownership,  age, family size ,income from crop product ,get extension agent ,off farm income, and sex were found to be statistically significant in determining loan repayment performance of smallholder farmers. Therefore, the study suggests the identified significant variables to be a spring board for further interventions by financial cooperatives, stakeholders and policy makers so as to come with a breakthrough to significantly decrease or even avoid defaulting problems.

Keywords: Determinants, smallholder farmer, loan, performance