Regression Analysis of Loan Repayment Capacity among Farmers in Doma, Nasarawa State

Abstract

This empirical paper is aimed at Regressionally Analyzing the socio-economic factors affecting Doma micro?financed farmers in repaying loans got from micro?financed organization. Farm credits are crucial inputs required by the small holder farmers to establish and expand farms. These credits are geared towards increasing agricultural production, enhancing food sufficiency, prompting household and national income as well as augmenting borrower’s ability to repay loans. Microcredit facilities have played vital roles in the socio-economic transformation of the rural economics. This study was conducted in five wards of Doma where farming is the main occupation of the people. Ten respondents from four cooperative societies each in the wards totaling two hundred respondents were randomly stratified and used as sample for the research. The logistic regression equation and maximum likelihood estimation technique were used for the analysis since the model is a binary choice model. The explanatory variables or interactions reduction reduced the risk of multi-collinearity and the economically and theoretically plausible variables were retained for analysis using the bivariate correlation matrix. The analysis shows that average amount of loan paid by farmers was 78.3% of the amount due for payment.

KEYWARDS: Loans; Banks; Doma; Equity; Microcredit; Micro?finance.