Factors influencing Collateral Demand among Crop farmers

Abstract

Abstract

The study examines the factors contributing to collateral demand among crop farmers in agrarian communities in Delta State, Nigeria. The study used a multistage sampling technique to select 135 crop farmers. Data was collected using structured questionnaires and interviews. The results showed that the average age of the respondents was 47 years, most of the respondents were male, and the average household size was 5 persons. The majority of respondents had some level of education, with an average farming experience of 14 years. The average farm size was 3 hectares, and the mean income was N175, 008.30. On average, farmers lived approximately 7.40 kilometers away from financial institutions. A significant portion of respondents had to provide collateral when accessing credit. Common types of collateral used included assets, land title deeds, guarantors, and farm-related assets. Cooperative societies were the primary financial institutions where respondents sought credit. The logistic regression analysis identified several factors that significantly influenced collateral demand at a 5% probability level. These factors include loan size, duration, purpose, borrower-lender relations, and collateral availability. The t-test results indicated that there is a significant level of credit accessibility among the sampled crop farmers. The study recommends the implementation of policies that enable farmers without appropriate landed properties to access funds for farming activities. This suggests the need for alternative forms of collateral or credit arrangements to support farmers who lack traditional collateral such as land.

Keywords: Collateral, collateral demand, credit, accessibility, crop farmers