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Factors Influencing Smallholders' Transaction Cost Of Borrowing From The Nigerian Agricultural And Cooperative Bank

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  • Olomola, A.S.

Abstract

In Nigeria, small-scale farmers are reluctant to borrow from formal institutions because of high transaction costs. This paper examines the components and determinants of borrowing transaction costs and argues that unless the loan administrative strategies are simplified and channels of loan delivery diversified, farmers would continue to find it difficult to use formal loans. Borrowing transaction costs are defined as the administrative expenses and transportation cost incurred by borrowers as well as the opportunity costs of the time spent in negotiating, acquiring nd repaying thee loan. These costs are determined mainly by the loan size and borrowers' distance from the loan office. Group lending is suggested as a cost-reducing approach that will be beneficial to both lenders and borrowers.

Suggested Citation

  • Olomola, A.S., 1992. "Factors Influencing Smallholders' Transaction Cost Of Borrowing From The Nigerian Agricultural And Cooperative Bank," Bangladesh Journal of Agricultural Economics, Bangladesh Agricultural University, vol. 15(2), pages 1-11, December.
    • Handle: RePEc:ags:bdbjaf:207836
    DOI: 10.22004/ag.econ.207836
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    Cited by:

    1. Adegbite, Olayinka O. & Machethe, Charles L., 2020. "Bridging the financial inclusion gender gap in smallholder agriculture in Nigeria: An untapped potential for sustainable development," World Development, Elsevier, vol. 127(C).

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