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DETERMINANTS OF INFORMAL CREDIT DEMAND AND SUPPLY AMONG FOOD CROP FARMERS IN AKWA IBOM STATE, NIGERIA
Abstract
This study was designed to examine the determinants of credit demand and supply in informal credit markets among food crop farmers in Akwa Ibom State of Nigeria. A multi-stage sampling technique was adopted in selecting 96 credit-user, arable crop farmers and 24 informal credit sources from 6 villages. Primary data were collected from this total of 120 respondents through the use of a structured questionnaire. The simultaneous equation technique, using two stage least squares was employed to examine the determinants of credit supply and demand. Results of data analyses revealed that farm income, profit, education, and interest amount determined demand whereas liquidity, experience in lending and interest amount determined supply. It was from this study that informal credit suppliers consider several factors before supplying credit to the rural farmers. In line with the findings of this study, it was recommended that steps for reducing the high interest rates charged by informal credit suppliers should be taken. Education is an important factor influencing credit demand and use. Designing appropriate educational packages for farmers, both formal and informal such as evening schools and adult education programmes will be beneficial. Government and financial institutions should ensure that credit meant for farming are used for farming by putting in place measures to check abuse.
Keywords: Demand and Supply, informal credit, determinants, crop farmers