Journal of Agricultural Economics and Development Vol. 7(2), pp. 007-012, July 2018 ISSN 2327-3151 ©2018 Academe Research Journals

Full Length Research Paper

Factors affecting credit use for rural farming at household level: Evidence from small holder farmers’ of Toke-Kutaye district.

Fikiru Temesgen^*, Hana Duguma and Chala Hailu

¹Department of Agricultural Economics, Ambo University, P.O.Box: 19, Ambo, Ethiopia.

*Corresponding author. E-mail. fiktems@gmail.com.

Accepted 14 July 2018

Abstract

Agricultural finance for smallholder farmers is critical for the growth and development of agricultural sector. The study is based on the survey of a total of 99 farmers which particularly covering three kebeles of Toke Kutaye district, Ethiopia with the objectives identifying factor affecting access to credit service. The data were collected from both primary and secondary sources in 2017/18. Binary logit model was used to analyze the factors affecting access to credit service. The results indicated that the significant variables included in the model such as education of the household head, frequency of extension contact and farmers’ perception of group lending were positively and significantly affect households’ participation credit service while family size and distance from MFIs were negatively and significantly affect households credit participation in the study area. This study recommends that in order to make agricultural development successful these factors and problems are taken into consideration by policy makers to participate in credit use. Our results have important implications for the management and future of farmers, as well as for the assessment of their development impacts.

Keywords: Access to credit, logit model, smallholder, study area.