E3 Journal of Agricultural Research and Development

E3 Journal of Agricultural Research and Development Vol. 2 (1) pp. 031-036, March 2012; © E3 Journals; ISSN 2276-9897

Effects of Rural Banking Scheme on the Investment Potentials of Rural Farmers in Ebonyi State

Abstract

The study determined the effect of rural banking scheme on the investment potentials of rural farmers in Ebonyi State. A total of 218 farmers and 6 banks were selected using multi-stage random and purposive sampling techniques respectively. Data collected were analyzed using both descriptive and inferential statistics. Results showed that most (90.8%) of the respondents accessed loans from NACRDB Ltd and also there was an increase in the volume of loan disbursed to farmers between 2003 and 2004 and a continuous decrease between 2005 and 2007. Bureaucracy (61.9%), distance to the bank (55.5%), level of collateral (54.1%), size of farm (49.1%) and credit worthiness (39.4%) (Table 2) affected significantly the amount of loan demanded by farmers. The results of regression analysis showed that the amount of loan borrowed had a significant (P<0.05) effect on investments on various farm inputs. Also, correlation coefficient showed that there was a significant (P<0.01) and positive relationship between amount borrowed and saved by farmers. Similarly, there was a positive and significant difference in the level of investment before and after obtaining loans when tested at 1% level. Credit worthiness, collateral, farm size, interest rate and the number of times a farmer has benefited from the bank were the most important factors that determine the amount of loan granted by banks to farmers (Table 4). Among the recommendations made were the establishment of more branches of rural banks and reduction of some of the administrative bottlenecks that hinders farmers’ access to rural banks

Keywords: Effects, Rural, Banking, Scheme, Investment, Potentials, Farmers