Factors Influencing Access to Credit for Rural People in Ethiopia

Abstract

The lack of access to credit continues to be a major obstacle in developing countries, particularly in rural areas. Providing access to microcredit in rural regions can significantly improve the lives of the poor. This study examines the factors that affect the access to microcredit among rural individuals in the Bilate Zuria district of the Sidama region. A cross-sectional dataset was collected from 385 respondents selected through multiple stage sampling. The data were analyzed using both descriptive and inferential statistics in SPSS. The results of the analysis reveal that out of the 385 respondents, 34.5% (133) had access to credit. The logistic regression model shows that gender, marital status, collateral, lending procedures, group lending, high interest rates, distance, number of dependents, and the availability of limited microfinance institutions significantly affect the access to credit for rural residents in the study area. It is recommended that policymakers, the government, and other stakeholders emphasize and improve the accessibility of microcredit and increase its availability in rural areas.