IDEAS home Printed from https://ideas.repec.org/a/eme/afrpps/afr-07-2022-0081.html
   My bibliography  Save this article

Identifying farmers' preferences for types of credit and its market structure in rural Benin using the conjoint analysis approach

Author

Listed:
  • Emile Sègbégnon Sonehekpon
  • Rose Fiamohe

Abstract

Purpose - This study analyzes farmers' preferences for agricultural credit and its market structure in rural Benin using the conjoint analysis approach. Design/methodology/approach - The data used come from primary sources collected from 228 randomly selected farmers. The conjoint analysis approach was used to produce the results. The bias associated with the heteroscedasticity of the error terms was fixed using the weighted least squares estimation method. Agricultural credit markets were segmented using the Calinski algorithm. Findings - The study results reveal that farmers prefer a long-term agricultural credit with a low interest rate received via mobile banking. The interaction between a type of credit with collateral and a low interest rate is positively correlated with farmers' credit demand. The authors also found that agricultural credit markets are heterogeneous because of the heterogeneity in farmers' credit demand. This result has led to three different rural credit market segments identified in the selected study's sites. The market share simulation reveals a significant market share for the type of credit preferred by farmers in two segments. Research limitations/implications - The proven evidence from this study can guide the development of appropriate agricultural financial products that promote financial inclusion among farmers in rural Benin. More specifically, agricultural financial policies that promote digital long-term credit with low interest rate and appropriate guarantee mechanisms can promote financial inclusion among farmers and reduce the problem of asymmetric information in agricultural credit market. The study also calls for the promotion of differentiated policies across the three identified segments in order to positively impact the welfare of all farmers. Practical implications - The use of agricultural financial products that include digital long-term credit with low interest rate and appropriate guarantee mechanisms promote financial inclusion and reduce asymmetric information problems in agricultural credit markets in rural Benin. Social implications - The promotion of long-term digital and cheap credit improves farmers household's wellbeing in rural Benin. Originality/value - This study contributes to a better understanding of the structure of rural credit markets. It also reveals the most preferred characteristics of rural credit profiles by farmers. Besides, it validates the importance of the use of guarantee as an appropriate mechanism which minimizes the problem of asymmetric information between financial agents and farmers.

Suggested Citation

  • Emile Sègbégnon Sonehekpon & Rose Fiamohe, 2022. "Identifying farmers' preferences for types of credit and its market structure in rural Benin using the conjoint analysis approach," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 83(2), pages 299-319, December.
  • Handle: RePEc:eme:afrpps:afr-07-2022-0081
    DOI: 10.1108/AFR-07-2022-0081
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1108/AFR-07-2022-0081/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers

    File URL: https://www.emerald.com/insight/content/doi/10.1108/AFR-07-2022-0081/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers

    File URL: https://libkey.io/10.1108/AFR-07-2022-0081?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    Credits profiles; Heterogeneity in rural credit markets; Farmers' preference; Conjoint analysis; Benin; G; G2; G21;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:afrpps:afr-07-2022-0081. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emerald Support (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.