Agricultural credit utilization among farmers in Bole district of Northern region, Ghana

This study examined factors influencing the probability of farmers accessing agricultural credit as well as the amount of received credit allocated to farming operations in the Bole district of Northern region, Ghana. A sample size of 100 respondents were randomly selected and interviewed through a well-structured questionnaire. Paired sample t-test was used to test whether there exist a significant difference between the amount of credit received and the amount allocated to farm sectors. Probit model was employed to identify factors influencing the probability of farmer’s access to agricultural credit while Tobit regression model was used to estimate the determinants of credit allocated to farm operations. Evidence from the paired-sample t-test indicated a significance difference between amount of credit received and amount allocated to farm operations. The results from the Probit model indicated that gender, household size, farmers engaging in off-farm income and membership of farmer-based-organization exert significant influence on the probability of farmer’s access to agricultural credit. Moreover, estimates from the Tobit regression model revealed that the amount of credit farmers allocate to farm sector is significantly influence by sex of the farmer, farmers level of education, the size of loan received, loan delay (number of days between loan application and receipt) as well as farmers receiving extension services. The study therefore recommends that loan applications should be approved on time to enable farmers used it for the intended purposes, and farmers should be advised through effective extension programs on the need to use loans for the purpose for which it was procured.