Determinants of Microcredit Use among Small-Scale Farmers in Ethiopia: Evidence from Raya kobo Woreda, Ethiopia

Abstract

Background: This study was fully conducted through primary data collected from 385 small scale farm household heads. Those farm household heads were determined by the Cochran formula of sample size determination and selected thorough three stage probability sampling. Result: The result of the study was obtained from binary logistic regression model and states that gender, age, education, family size, dependency ratio, oxen ownership, irrigation, extension service, membership of social organization, total asset, remittance, economic shocks, purpose of credit use, perception for group lending, organizational procedures and distance from the town were important factors influencing small-scale farmers access to micro credit in the study area. The rest factors, those are marital status, farm size and soil fertility were less powerful in explaining smallholder farmers’ access to microcredit loans. Conclusions: Therefor the expansion of irrigation scheme and reduction of bureaucratic procedures to develop new rural institution plays a great role in the creation and expansion of non-farm activities and increase access of microcredit use. Keywords: Irrigation scheme, Logistic regression, Micro-credit, Raya kobo DOI: 10.7176/JESD/13-11-02 Publication date: June 30 th 2022