Participation of Smallholder Farmers in Formal Credit Program in Dembecha District, Ethiopia

Abstract

In Ethiopia and elsewhere in developing countries adoption of agricultural technology, agricultural productivity and commercialization of the smallholder farmers are mainly depend upon accessibility of rural finance.  This study assessed factors affecting use of formal credit by smallholder farmers in Dembecha district, Ethiopia. A systematic random sample of 200 households was drawn from four purposively selected kebeles. Descriptive statistics, inferential statistics and binary logistic regression model were used to analyze the data. The study concluded that farmers living closer to credit institution, who are more educated and well trained have a greater tendency to use formal credit. Therefore, the credit institution has to be increasing its branches and rural credit satellites so that this will decrease the farmer’s opportunity cost of time. Besides, regularly monitoring and evaluation on how the customer’s use their credit is also essential.

Keywords: Formal, Credit, participation, smallholder, Ethiopia

DOI: 10.7176/JESD/11-15-05

Publication date:August 31^st 2020