Determinants of Agro-Dealers’ Participation in the Loan Market in Nigeria

Agro-dealership financing deserves policy attention if agro-dealers are to contribute to the success of the ongoing agricultural transformation in Nigeria. Thus, this study seeks to (i) examine the issues influencing the decisions of agro-dealers to participate in the loan market, (ii) analyze the demand for business loan by the agro-dealers and (iii) articulate policy measures for sustainable financing of agro-input business enterprises in Nigeria. The study employed primary data collected through structured questionnaires from 300 agro-dealers and used a Tobit type-II model for the analysis. The results show that interest rate, debt, value of asset, membership of trading association and source of credit are major determinants of loan demand. Agro-dealers need to organize themselves into input trading associations to enhance their creditworthiness and unleash the inherent social capital and information advantages for improved agro-dealership financing. Moreover, diversification of product coverage by agro-dealers and a value-chain approach that links internal financing in the form of trade credit within the agro-input sector with external financing from the commercial banks are strongly recommended.


Editor(s):
IFAMR, IFAMA
Issue Date:
Sep 01 2014
Publication Type:
Journal Article
DOI and Other Identifiers:
10.22004/ag.econ.183449
(ISSN#: 1559-2448) (Other)
Record Identifier:
https://ageconsearch.umn.edu/record/183449
PURL Identifier:
http://purl.umn.edu/183449
Published in:
International Food and Agribusiness Management Review, 17, 3
Page range:
65-84
Total Pages:
20
JEL Codes:
G2; M2
Note:
The IFAMR is published quarterly by the International Food and Agribusiness Management Association. www.ifama.org
Series Statement:
Volume 17
Issue 3




 Record created 2017-04-01, last modified 2020-10-28

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