Factors determining access to formal credit in Ghana: A case study of smallholder farmers in the Abura-Asebu Kwamankese district of central region of Ghana

Abstract

This study sought to identify factors that limit or increase smallholder farmers’ access to formal credit in the Abura Asebu Kwamankese district of the central region of Ghana. The study was conducted in five towns of the district (that is Abura, Abakrampa, Asebu, Edumfa and Nyamebekyere). Sampled farmers comprised twenty previous credit applicants from each of the five towns. Primary data was collected from both farmers and bank officials in the study area whilst secondary data was collected from four formal financial institutions in the study area. Descriptive statistics and a binary logistic model were used to analyse quantitative data collected. Results of the logistic regression model revealed that extension contact, education level and saving habit had significant positive influence on farmers’ access to formal credit. The odds of a smallholder accessing formal credit increased by a factor of 601.09, 371.40 and 10.98% for savings habit, extension contact and education level respectively. Output of the study revealed that 35% of sampled farmers had access to formal credit.   Key words: Factors, access, formal credit, smallholder farmers, Ghana.