Journal of Agriculture, Biotechnology & Ecology, 8(1), 64-73, 2015
Effects of Rural Banking Scheme on the Investment
Potentials of Rural Farmers in Ebonyi State, Nigeria
B. N. Mbam
Department of Agricultural Economics, Management and Extension, Ebonyi
State University, PMB 053, Abakaliki, Ebonyi State, Nigeria
The study determined the effect of rural banking scheme on the investment potentials of rural farmers in Ebonyi State. A total of 215 farmers and 5 banks were selected using multi-stage random and purposive sampling techniques respectively. Data collected were analyzed using descriptive and inferential statistics. Results showed that most (90.8%) of the respondents accessed loans from Nigerian Agricultural Cooperative and Rural Development Bank Limited (NACRDB) and also there was an increase in the volume of loan disbursed to farmers between 2003 and 2004 and a continuous decrease between 2005 and 2007. Bureaucracy (61.9%), distance to the bank (55.5%), level of collateral (54.1%), size of farm (49.1%) and credit worthiness (39.4%) significantly affected the amount of loan demanded by farmers. Regression analysis showed that the amount of loan borrowed had a significant (P<0.05) effect on investments in various farm inputs. Also, correlation coefficient showed that there was a significant (P<0.01) positive relationship between amount borrowed and saved by farmers. Similarly, there was a positive and significant difference in the level of investment before and after obtaining loans when tested at 1% level. Credit worthiness, collateral, farm size, interest rate and the number of times a farmer has benefited from the bank were the most important factors that determine the amount of loan granted by banks to farmers. Among the recommendations made were the establishment of more branches of rural banks and reduction of some of the administrative bottlenecks that hinder farmers’ access to rural banks.
Keywords: Effects, Rural, Banking, Scheme, Investment, Potentials, Farmers.
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