Access of Credit and Factors Affecting Loan Repayment Performance of Smallholders in Nekemte Town East Wollega Zone of Oromia Regional State

Wakuma Dufera Tesgera

doi:doi:10.11648/j.jwer.20190802.12

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Access of Credit and Factors Affecting Loan Repayment Performance of Smallholders in Nekemte Town East Wollega Zone of Oromia Regional State

Wakuma Dufera Tesgera

Published in Journal of World Economic Research (Volume 8, Issue 2)

Received: 30 May 2019 Accepted: 11 July 2019 Published: 30 December 2019

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Abstract

This study is concerned with analysis of factors affecting loan repayment performance of smallholders in East Wollega zone Nekemte town. As credit is one of the most important factors required for smallholders input utilization, its repayment to the lender is also of paramount importance to have sustainable agricultural development and financial institutions. Different agricultural development programs and strategies were implemented in the country in the past three decades. Secondary data from relevant institutions were used just to highlight on different approaches used in different decades regarding agriculture and agricultural credit development strategies. In the course of this study primary data were collected from 120 randomly selected farm household borrowers of fertilizer credit using structured questionnaire. These respondents were drawn from six Peasant association and two Saving and Credit service in the study area. For the analysis of farm data, descriptive statistics such as mean, standard deviation and percentages were used to describe socio-economic characteristics of the respondents. Partial correlation coefficient and variance inflation factor (VIF) were calculated to detect multi-co linearity and association among the continuous and discrete variables, respectively. Then, a multivariate tool, linear discriminate analysis, was used to identify the most important variables attributed to discriminate between non-defaulters and defaulters of fertilizer credit for 2018 production season. The result of the analysis showed that the frequency of contact with development agents, livestock ownership in livestock unit and celebration of occasional ceremonies were statistically significant factors responsible for the optimum discrimination rule between the two groups. Another multivariate tool, multiple linear regression analysis, was used to identify critical variables that contributed to timely repayment of loan for non-defaulter respondents. Experience in own farm, experience in credit use, proportion of area under pea, beans and wheat production, annual farm revenue, number of draught oxen owned, ownership of livestock in livestock unit, number of contacts with development agents.

Published in	Journal of World Economic Research (Volume 8, Issue 2)
DOI	10.11648/j.jwer.20190802.12
Page(s)	40-48
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Loan, Factors of Loan Repayment, Smallholder Households

References

[1]	Assefa Admassie and Franz Heidhues. 2013. “Estimation of Technical Efficiency of Smallholder Farmers in the Central Highlands of Ethiopia.”
[2]	Assefa Admassie. 2012. "A Study of Factors that Affect the Use of Agricultural Credit among Bangladesh: An Empirical Analysis.” Food Consumption and Nutrition Division.
[3]	Bekele Tilahun. 2012. “Rural Credit in Ethiopia.” In: Dejene Aredo and Mulat Demeke (eds).
[4]	Belay Kassa. 2014. “Ethiopia’s Export Earning Instability: The contribution of Major Agricultural Commodities.” Ethiopian Journal of Agricultural Economics vol. 2 No. 1 (in press).
[5]	Brikhaeuser, O., Evenson, R. E., and Feder, G. 2011. "The Impact of Agricultural Extension: A.
[6]	CSA (Central Statistical Authority). 2015. Facts and Figures in Ethiopia. Addis Ababa, Ethiopia.
[7]	Development Bank of Ethiopia, 2014. “Report on Loan Recovery Performance of the DBE (July 1, 2013 to June, 30, 2014).” Research and Planning Department, Monitoring and Evaluation Division, Addis Ababa.
[8]	Demeke. 2011. “Farmers’ Response to New Technologies in Coffee Production: The Case of Small Farmers in Ghimbi CIPA Wollega.”
[9]	Hosmer and Lemeshew (1989): Horticultural Systems in Tropics, Working Paper Series 1. University of Hannover, Institute of Horticultural Economics.
[10]	Itana Ayana. 2015. “Credit Policy, Financial Institutions and Private Investment in Ethiopia. Singh et. al (2015) Smallholder Farmers in the Central Highlands of Ethiopia.” Ethiopian J. of Agr. Econ., 1 (1), 18-37.
[11]	Wenner, O. 2015. "Group credit: A Means to Improve Information Transfer and Loan Repayment Performance." The Journal of Development Studies, 32 (2), 263-281.
[12]	Yemane. (1967). "Statistics, An introductory Analysis. (2nd Edition.), Harper and Row, New York. 258pp."
[13]	Mouktar Hasen, (2017) Factors Influencing the Performance of Small and Micro Enterprises (SMEs) in Somaliland a Case Study of Hargeisa City.
[14]	Dereje Muleta (2016) Micro and Small Enterprises in Assosa Town. A Case Study of Factors Affecting Performance.
[15]	kurt Matzler (2013) Open innovation in small and micro enterprises.

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APA Style

Wakuma Dufera Tesgera. (2019). Access of Credit and Factors Affecting Loan Repayment Performance of Smallholders in Nekemte Town East Wollega Zone of Oromia Regional State. Journal of World Economic Research, 8(2), 40-48. https://doi.org/10.11648/j.jwer.20190802.12

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ACS Style

Wakuma Dufera Tesgera. Access of Credit and Factors Affecting Loan Repayment Performance of Smallholders in Nekemte Town East Wollega Zone of Oromia Regional State. J. World Econ. Res. 2019, 8(2), 40-48. doi: 10.11648/j.jwer.20190802.12

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AMA Style

Wakuma Dufera Tesgera. Access of Credit and Factors Affecting Loan Repayment Performance of Smallholders in Nekemte Town East Wollega Zone of Oromia Regional State. J World Econ Res. 2019;8(2):40-48. doi: 10.11648/j.jwer.20190802.12

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@article{10.11648/j.jwer.20190802.12,
  author = {Wakuma Dufera Tesgera},
  title = {Access of Credit and Factors Affecting Loan Repayment Performance of Smallholders in Nekemte Town East Wollega Zone of Oromia Regional State},
  journal = {Journal of World Economic Research},
  volume = {8},
  number = {2},
  pages = {40-48},
  doi = {10.11648/j.jwer.20190802.12},
  url = {https://doi.org/10.11648/j.jwer.20190802.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jwer.20190802.12},
  abstract = {This study is concerned with analysis of factors affecting loan repayment performance of smallholders in East Wollega zone Nekemte town. As credit is one of the most important factors required for smallholders input utilization, its repayment to the lender is also of paramount importance to have sustainable agricultural development and financial institutions. Different agricultural development programs and strategies were implemented in the country in the past three decades. Secondary data from relevant institutions were used just to highlight on different approaches used in different decades regarding agriculture and agricultural credit development strategies. In the course of this study primary data were collected from 120 randomly selected farm household borrowers of fertilizer credit using structured questionnaire. These respondents were drawn from six Peasant association and two Saving and Credit service in the study area. For the analysis of farm data, descriptive statistics such as mean, standard deviation and percentages were used to describe socio-economic characteristics of the respondents. Partial correlation coefficient and variance inflation factor (VIF) were calculated to detect multi-co linearity and association among the continuous and discrete variables, respectively. Then, a multivariate tool, linear discriminate analysis, was used to identify the most important variables attributed to discriminate between non-defaulters and defaulters of fertilizer credit for 2018 production season. The result of the analysis showed that the frequency of contact with development agents, livestock ownership in livestock unit and celebration of occasional ceremonies were statistically significant factors responsible for the optimum discrimination rule between the two groups. Another multivariate tool, multiple linear regression analysis, was used to identify critical variables that contributed to timely repayment of loan for non-defaulter respondents. Experience in own farm, experience in credit use, proportion of area under pea, beans and wheat production, annual farm revenue, number of draught oxen owned, ownership of livestock in livestock unit, number of contacts with development agents.},
 year = {2019}
}

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TY  - JOUR
T1  - Access of Credit and Factors Affecting Loan Repayment Performance of Smallholders in Nekemte Town East Wollega Zone of Oromia Regional State
AU  - Wakuma Dufera Tesgera
Y1  - 2019/12/30
PY  - 2019
N1  - https://doi.org/10.11648/j.jwer.20190802.12
DO  - 10.11648/j.jwer.20190802.12
T2  - Journal of World Economic Research
JF  - Journal of World Economic Research
JO  - Journal of World Economic Research
SP  - 40
EP  - 48
PB  - Science Publishing Group
SN  - 2328-7748
UR  - https://doi.org/10.11648/j.jwer.20190802.12
AB  - This study is concerned with analysis of factors affecting loan repayment performance of smallholders in East Wollega zone Nekemte town. As credit is one of the most important factors required for smallholders input utilization, its repayment to the lender is also of paramount importance to have sustainable agricultural development and financial institutions. Different agricultural development programs and strategies were implemented in the country in the past three decades. Secondary data from relevant institutions were used just to highlight on different approaches used in different decades regarding agriculture and agricultural credit development strategies. In the course of this study primary data were collected from 120 randomly selected farm household borrowers of fertilizer credit using structured questionnaire. These respondents were drawn from six Peasant association and two Saving and Credit service in the study area. For the analysis of farm data, descriptive statistics such as mean, standard deviation and percentages were used to describe socio-economic characteristics of the respondents. Partial correlation coefficient and variance inflation factor (VIF) were calculated to detect multi-co linearity and association among the continuous and discrete variables, respectively. Then, a multivariate tool, linear discriminate analysis, was used to identify the most important variables attributed to discriminate between non-defaulters and defaulters of fertilizer credit for 2018 production season. The result of the analysis showed that the frequency of contact with development agents, livestock ownership in livestock unit and celebration of occasional ceremonies were statistically significant factors responsible for the optimum discrimination rule between the two groups. Another multivariate tool, multiple linear regression analysis, was used to identify critical variables that contributed to timely repayment of loan for non-defaulter respondents. Experience in own farm, experience in credit use, proportion of area under pea, beans and wheat production, annual farm revenue, number of draught oxen owned, ownership of livestock in livestock unit, number of contacts with development agents.
VL  - 8
IS  - 2
ER  -

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Author Information

Wakuma Dufera Tesgera

School of Business and Economics, Wollega University, East Wollega, Ethiopia

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Wakuma Dufera Tesgera. (2019). Access of Credit and Factors Affecting Loan Repayment Performance of Smallholders in Nekemte Town East Wollega Zone of Oromia Regional State. Journal of World Economic Research, 8(2), 40-48. https://doi.org/10.11648/j.jwer.20190802.12

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ACS Style

Wakuma Dufera Tesgera. Access of Credit and Factors Affecting Loan Repayment Performance of Smallholders in Nekemte Town East Wollega Zone of Oromia Regional State. J. World Econ. Res. 2019, 8(2), 40-48. doi: 10.11648/j.jwer.20190802.12

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AMA Style

Wakuma Dufera Tesgera. Access of Credit and Factors Affecting Loan Repayment Performance of Smallholders in Nekemte Town East Wollega Zone of Oromia Regional State. J World Econ Res. 2019;8(2):40-48. doi: 10.11648/j.jwer.20190802.12

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@article{10.11648/j.jwer.20190802.12,
  author = {Wakuma Dufera Tesgera},
  title = {Access of Credit and Factors Affecting Loan Repayment Performance of Smallholders in Nekemte Town East Wollega Zone of Oromia Regional State},
  journal = {Journal of World Economic Research},
  volume = {8},
  number = {2},
  pages = {40-48},
  doi = {10.11648/j.jwer.20190802.12},
  url = {https://doi.org/10.11648/j.jwer.20190802.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jwer.20190802.12},
  abstract = {This study is concerned with analysis of factors affecting loan repayment performance of smallholders in East Wollega zone Nekemte town. As credit is one of the most important factors required for smallholders input utilization, its repayment to the lender is also of paramount importance to have sustainable agricultural development and financial institutions. Different agricultural development programs and strategies were implemented in the country in the past three decades. Secondary data from relevant institutions were used just to highlight on different approaches used in different decades regarding agriculture and agricultural credit development strategies. In the course of this study primary data were collected from 120 randomly selected farm household borrowers of fertilizer credit using structured questionnaire. These respondents were drawn from six Peasant association and two Saving and Credit service in the study area. For the analysis of farm data, descriptive statistics such as mean, standard deviation and percentages were used to describe socio-economic characteristics of the respondents. Partial correlation coefficient and variance inflation factor (VIF) were calculated to detect multi-co linearity and association among the continuous and discrete variables, respectively. Then, a multivariate tool, linear discriminate analysis, was used to identify the most important variables attributed to discriminate between non-defaulters and defaulters of fertilizer credit for 2018 production season. The result of the analysis showed that the frequency of contact with development agents, livestock ownership in livestock unit and celebration of occasional ceremonies were statistically significant factors responsible for the optimum discrimination rule between the two groups. Another multivariate tool, multiple linear regression analysis, was used to identify critical variables that contributed to timely repayment of loan for non-defaulter respondents. Experience in own farm, experience in credit use, proportion of area under pea, beans and wheat production, annual farm revenue, number of draught oxen owned, ownership of livestock in livestock unit, number of contacts with development agents.},
 year = {2019}
}

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TY  - JOUR
T1  - Access of Credit and Factors Affecting Loan Repayment Performance of Smallholders in Nekemte Town East Wollega Zone of Oromia Regional State
AU  - Wakuma Dufera Tesgera
Y1  - 2019/12/30
PY  - 2019
N1  - https://doi.org/10.11648/j.jwer.20190802.12
DO  - 10.11648/j.jwer.20190802.12
T2  - Journal of World Economic Research
JF  - Journal of World Economic Research
JO  - Journal of World Economic Research
SP  - 40
EP  - 48
PB  - Science Publishing Group
SN  - 2328-7748
UR  - https://doi.org/10.11648/j.jwer.20190802.12
AB  - This study is concerned with analysis of factors affecting loan repayment performance of smallholders in East Wollega zone Nekemte town. As credit is one of the most important factors required for smallholders input utilization, its repayment to the lender is also of paramount importance to have sustainable agricultural development and financial institutions. Different agricultural development programs and strategies were implemented in the country in the past three decades. Secondary data from relevant institutions were used just to highlight on different approaches used in different decades regarding agriculture and agricultural credit development strategies. In the course of this study primary data were collected from 120 randomly selected farm household borrowers of fertilizer credit using structured questionnaire. These respondents were drawn from six Peasant association and two Saving and Credit service in the study area. For the analysis of farm data, descriptive statistics such as mean, standard deviation and percentages were used to describe socio-economic characteristics of the respondents. Partial correlation coefficient and variance inflation factor (VIF) were calculated to detect multi-co linearity and association among the continuous and discrete variables, respectively. Then, a multivariate tool, linear discriminate analysis, was used to identify the most important variables attributed to discriminate between non-defaulters and defaulters of fertilizer credit for 2018 production season. The result of the analysis showed that the frequency of contact with development agents, livestock ownership in livestock unit and celebration of occasional ceremonies were statistically significant factors responsible for the optimum discrimination rule between the two groups. Another multivariate tool, multiple linear regression analysis, was used to identify critical variables that contributed to timely repayment of loan for non-defaulter respondents. Experience in own farm, experience in credit use, proportion of area under pea, beans and wheat production, annual farm revenue, number of draught oxen owned, ownership of livestock in livestock unit, number of contacts with development agents.
VL  - 8
IS  - 2
ER  -

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