Determinants of Loan Acquisition and Utilization among Smallholder Rice Producers in Lagos State, Nigeria
Abstract
:1. Introduction
2. Conceptual Framework
2.1. Concept of Loan/Credit
2.2. Sources of Agriculture Loan Facilities in Nigeria
2.3. Determinants of Loan Access
3. Materials and Methods
3.1. Study Area
3.2. Empirical Model for the Determinants of Farmer’s Choice of Loan
3.3. Empirical Model for the Determinants of Loan Acquisition and Utilization
4. Results and Discussion
4.1. Descriptive Statistics Results
4.2. Descriptive Statistics of Farmers’ Sources of Loan
4.3. Econometric Results
4.4. Determinants of Rice Farmers’ Choice of Loan Sources from Financial Institutions
4.5. Determinants of Loan Access and Utilization
5. Conclusions and Recommendations
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Acknowledgments
Conflicts of Interest
References
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Variable | Description | Mean | SD |
---|---|---|---|
Dependent | |||
Access to loan | 1 if farmer has access to loan and 0 otherwise | 0.88 | 0.32 |
Amount of loan | The amount of loan obtained by farmers from the financial institutions (in NGN/USD) | 104,192.2 | 60,335.83 |
Choice of loan sources | Category (1 if formal source, 2 if informal source and 3 if personal savings) | 1.37 | 0.68 |
Explanatory | |||
Age | Continuous variable indicating age of the farmers (years) | 38.37 | 10.47 |
Sex | 1 if male and 0 otherwise | 0.65 | 0.477 |
Marital status | 1 if single and 0 otherwise | 0.23 | 0.42 |
Household size | Continuous variable indicating number of people on respondent | 3.62 | 2.31 |
Education | Continuous variable indicating number of years spent in formal education (years) | 12.31 | 3.33 |
Farming experience | Continuous variable indicating the period of time a farmer has been growing rice (years) | 4.87 | 1.73 |
Farm size | Continuous variable indicating the total land area under rice production (hectares) | 1.57 | 0.49 |
Membership in a cooperative | 1 if farmer is member of cooperative and 0 otherwise | 0.89 | 0.32 |
Contact with extension agent | 1 if famer has access to extension service and 0 otherwise | 0.028 | 0.1666 |
Interest rate | Interest rate as a percentage | 15.41 | 6.659 |
Annual off-farm income | Continuous variable indicating the annual off-farm income of the respondent farmer (in NGN/USD) | 312,438.4 | 175,204.5 |
Annual farm income | Continuous variable indicating the annual farm income of the respondent farmer (in NGN/USD). | 462,098.9 | 213,997.2 |
Loan Sources | Frequency | Percentage (%) | Interest Rate (%) |
---|---|---|---|
Personal savings | 32 | 11.39 | - |
Formal sources | 112 | 39.86 | 9–15 |
Informal sources | 137 | 48.75 | 20–25 |
Variable | VIF | Tolerance |
---|---|---|
Multicollinearity test | ||
Farm size | 3.92 | 0.2549 |
Household size | 3.54 | 0.2759 |
Marital status | 2.92 | 0.3428 |
Annual off farm income | 2.28 | 0.4394 |
Membership | 2.27 | 0.4410 |
Interestrate | 2.17 | 0.4614 |
Age | 1.89 | 0.5282 |
Farming exp | 1.47 | 0.6815 |
Education | 1.20 | 0.8365 |
Sex | 1.17 | 0.8521 |
Extension agent | 1.16 | 0.8648 |
Mean VIF | 2.30 | |
Breusch–Pagan test for heteroscedasticity | ||
Chi-square | 31.84 *** |
Explanatory Variables | Formal Source | Informal Source | ||||
---|---|---|---|---|---|---|
Personal Savings (Base Outcome) | ||||||
Coeff | SE | ME | Coeff | SE | ME | |
Age | 0.067 | 0.060 | 0.0073 | 0.037 | 0.059 | −0.0070 |
Sex | −0.30 | 0.89 | −0.015 | −0.24 | 0.88 | 0.014 |
Marital status | 1.62 | 1.54 | −0.25 | 2.72 * | 1.51 | 0.26 |
Household size | −0.028 | 0.26 | −0.044 | 0.15 | 0.25 | 0.045 |
Education | 0.20 | 0.15 | 0.029 | 0.083 | 0.15 | −0.028 |
Farming experience | −0.37 | 0.31 | −0.023 | −0.28 | 0.31 | 0.021 |
Farm size | 4.30 ** | 1.76 | −0.018 | 4.42 ** | 1.76 | 0.043 |
Engage in off farm | −0.84 | 1.80 | 0.025 | −0.95 | 1.78 | −0.029 |
Annual off farm income | 1.12 × 10−6 | 3.92 × 10−6 | 0.219 × 10−6 | 0.240 × 10−6 | 3.92 × 10−6 | −0.215 × 10−6 |
Interest rate | 0.40 *** | 0.081 | 0.00080 | 0.40 *** | 0.080 | 0.0015 |
Constant | −11.45 *** | 4.13 | −9.88 *** | 4.07 | ||
Observation | 281 | |||||
LR chi2 (22) | 172.23 *** | |||||
Prob > chi2 | 0.0000 | |||||
Pseudo-R2 | 0.3178 |
Variables | First Part Model | Second Part Model | Marginal Effect |
---|---|---|---|
Age | 0.19 | −0.00089 | 23.81 |
(0.20) | (0.0027) | ||
Sex | −0.87 | −0.0028 | −829.96 |
(1.81) | (0.046) | ||
Marital status | 3.38 | 0.058 | 8134.39 |
(3.94) | (0.085) | ||
Household size | −0.82 | 0.017 | 1292.62 |
(0.66) | (0.017) | ||
Education | 0.15 | 0.026 *** | 2771.96 |
(0.24) | (0.0067) | ||
Farming experience | 0.64 | 0.028 ** | 3331.04 |
(0.67) | (0.014) | ||
Farm size | −1.74 | 0.45 *** | 45,395.16 |
(4.71) | (0.067) | ||
Annual off-farm income | −0.000012 | −2.76 × 10−7 ** | −0.04 |
(9.21 × 10−6) | (1.18 × 10−7) | ||
Annual farm income | 0.000055 ** | 6.62 × 10−7 *** | 0.10 |
(0.000022) | (1.70 × 10−7) | ||
Interest rate | 0.76 * | −0.0069 | −258.32 |
(0.39) | (0.0049) | ||
Constant | −23.01 * | 10.22 *** | |
(13.56) | (0.19) | ||
Observation | 281 | 248 | |
LR Chi2(10)/F-value | 187.51 *** | 33.33 *** | |
Prob > Chi2/Prob > F | 0.0000 | 0.0000 | |
Peudo-R2/R-squared | 0.9222 | 0.5844 | |
Adjusted R-squared | 0.5669 |
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Ameh, M.; Lee, S.H. Determinants of Loan Acquisition and Utilization among Smallholder Rice Producers in Lagos State, Nigeria. Sustainability 2022, 14, 3900. https://doi.org/10.3390/su14073900
Ameh M, Lee SH. Determinants of Loan Acquisition and Utilization among Smallholder Rice Producers in Lagos State, Nigeria. Sustainability. 2022; 14(7):3900. https://doi.org/10.3390/su14073900
Chicago/Turabian StyleAmeh, Michael, and Sang Hyeon Lee. 2022. "Determinants of Loan Acquisition and Utilization among Smallholder Rice Producers in Lagos State, Nigeria" Sustainability 14, no. 7: 3900. https://doi.org/10.3390/su14073900