Credit demand

This book provides some answers to the question of why farmers operating under obvious financial constraints are unwilling to take out institutional credit. It explores the characteristics of farmers and their farms, the economic portfolio of farm households, institutional factors, the characteristics of financial products and the perception of risk that determine the demand for credit from these actors. Age, household size, distance from bank branches, collateral requirements and application processing time were found to reduce the likelihood of applying for credit, while livestock rearing, savings, higher monthly income and credit history improved it. Access to an alternative source of financing, improved repayment times and financial education improve the probability of borrowing, while increased financing needs improve it.