Academe Research Journals

Journal of Agricultural Economics and Development

Full Length Research Paper

Determinants analysis of loan use and repayment behaviour among farmers in Benin: A semi-nonparametric bivariate probit approach

^1*Tchekpo Fortune Ogouvide, ¹Ygue Patrice Adegbola, ²Afio Zannou and ³Gauthier Biaou

¹National Agricultural Research Institute of Benin, Abomey-Calavi, Republic of Benin

²Faculty of Agricultural Sciences, University of Abomey-Calavi, Republic of Benin

³National Agricultural University of Porto Novo, Republic of Benin.

*Corresponding author. E-mail: fogouvide10@gmail.com, fogouvide10@yahoo.fr. Tel. (+229) 97415694

Accepted 16 July 2020

Abstract

This paper analysed the determinants of the use and repayment behaviour of loans among farmers in Benin. Data were collected from 400 farmers randomly selected from twenty villages’ representative of the country's seven Agricultural Development Hubs (ADH). The data were analysed using a semi-non parametric bivariate probit approach. The results indicated that there was a relationship between the decision to use the loans and the decision to repay them. In total, nine explanatory variables in the model were significant. Three of these variables (education level, membership of a farmer organization and income) determined with different levels of significance the use of q and default on loan repayment. Five of these variables (age, sex, household size, farm size and contact with extension services) influenced loan use, but had no significant effect on loan repayment. A single variable (asset value) had no effect on loan use, but had significantly affected the repayment of the loan. Based on these results from Benin, MFIs in developing countries should take into account significant variables when concluding contracts with borrowing farmers.

Keywords: Farmer, agricultural credit, repayment, bivariate probit model, sample selection, Benin

JEL: F G4 G41 G410