Formal Lending Research Articles

Women entrepreneurs in rural Nigeria: formal versus informal credit schemes

PurposeThis study examines why low-wealth women entrepreneurs forgo mobile enabled money services and government supported micro finance for informal, community-based revolving loans in rural Nigeria.Design/methodology/approachThematic analysis of 25 interviews with women in rural, south-west Nigeria. Entrepreneurial ecosystem theory, in the gendered context of micro finance and community-based lending, is employed.FindingsThis study explains the paradox of forgoing seemingly accessible mobile enabled credit, and formal credit schemes (e.g. micro-finance programs) for informal, one-on-one borrowing. Convenience and trust-based relationships with respected community members ease the burden of time scarcity and vulnerability associated with formal capital. Flexible terms, autonomy, self-reliance and knowing who one is dealing with make Esusu a preferred source of finance. Findings are discussed in the context of gendered entrepreneurial ecosystems in which participants conduct business.Research limitations/implicationsThe sample is not representative of women entrepreneurs in rural Nigeria. Survivorship bias is acknowledged. Further research is needed on the psychological risks of informal capital and the benefits of community-based lending.Practical implicationsMeasures to scale mobile enabled credit, without commensurate interventions to address time management and other structural issues that confront women traders, limit their utility and impacts. Power differentials between women traders and lenders must also be considered in the design of lending products. Training of women traders and formal lenders should incorporate curricula about gender gaps in capital markets and systematic gender challenges to support entrepreneurs who seek to grow beyond subsistence enterprises.Originality/valueThis study documents decision criteria that motivate informal rural women traders to employ community-based revolving credit or Esusu. Findings inform measures to increase women entrepreneurs' access to capital in a rural sub-Saharan Africa contexts.

The impact of technology on access to credit: A review of loan approval and terms in rural Vietnam and Thailand

The acceleration of economic digitalisation has been immense in recent years, especially when coupled with the rapid development of technology-augmented finance. However, less understood is how such technology-augmented finance has impacted access to credit within rural contexts of developing economies. Using household-level survey data, our results provide novel evidence of a negative relationship, on average, between rural households’ access to credit, as measured by loan approvals, and internet access. More specifically, use of internet in rural areas of the countries under analysis reduces the chance of accessing credit by up to 65%. Moreover, when we further investigate loan terms, our findings indicate that internet users get six-month shorter loan durations and have a lower interest cost of borrowing of up to 1.2%. The results for loan approval rates are persistent for formal loans and for nations at a lower stage of economic development, i.e., only within the less developed Vietnamese rural context. Our findings provide richer insights into the impact of information and telecommunication technologies (ITC) on access to finance in developing countries characterised by significant proportions of rural areas affected by severe information asymmetry-related issues that may be amplified or reduced by increased internet connectivity. Our results carry important policy implications. On the demand side, they highlight the need to ensure that government initiatives should aim to better educate rural borrowers in relation to financial literacy and credit choices. On the supply side, our findings urge the need to introduce policies for formal lenders targeted towards the reduction of the information asymmetries pervasive in rural areas.

Entrepreneurial financing: how global and regional export intentions affect financial and non-financial choices for small and midsized enterprises in low-income countries

PurposeThe study explores how the intention to export affects financing and non-financing variables for small and medium-sized enterprises (SMEs) in a low-income country (LIC). The objectives of this study are (1) to discern between regional and global exporting and (2) to evaluate its policymaking implications.Design/methodology/approachPrimary survey data were collected from 330 Rwandan SMEs and were analysed using ordered logistic models as an application of the expectation-maximisation iterating algorithm, which was tested for robustness using a sampling model variation.FindingsThe results show that alternative sources of finance are the predominant choice to finance the intention to export within and outside Africa. As the scope of export intentions broadened from regional to global, there was a shift in preferences from less formal to more formal lending technologies, moving from methods like factoring to lines of credit. Moreover, reliance on bank officers became more significant, with increasing marginal effects. Finally, the study determined that government financing schemes were not relevant for SMEs pursuing either regional or global exporting.Practical implicationsWhilst alternative sources of finance predominate the export intentions of Rwandan SMEs, establishing a robust banking relationship becomes crucial for global exporting. Despite this implication, the intention to export should prompt more transparent communication regarding government financial support programmes. There is an opportunity for increased usage of relationship lending to customise support for SMEs involved in exporting, benefiting both the private and public sectors.Originality/valueThis study accentuates how export distance alters SME financing priorities. The results also contribute to understanding how the value of relationship lending changes when less familiar markets (i.e. global exporting) are the objective. Moreover, the study offers a new perspective on how institutional voids affect entrepreneurial financing decisions in LICs.

The Leveraging of Support by Faith-Based Social Groups in Rural Villages of the Federal Capital Territory, Nigeria

Social networks and social groups are often regarded as being important elements of social capital. The research set out in this paper is designed to explore whether social groups in villages located close to the Nigerian capital city of Abuja seek to lever benefits from the connections (networks) they may have with the government and others in that city. Of special interest is whether there is a significant difference between secular and faith-based social groups in terms of the leveraging of such support. The research builds upon a previous study that employed a questionnaire-based survey of 26 social groups spanning two area councils (ACs; Bwari and Kwali) in the Federal Capital Territory of Nigeria followed by a series of in-depth interviews with leaders of the groups (e.g., chairperson, secretary, and treasurer) to explore the findings. The results were analysed using regression and suggest that most groups (14) had sought to lever support from their connections in Abuja. Those more likely to leverage support were registered with their respective ACls, a requirement for accessing credit from formal lenders, and tended to be smaller in size in terms of membership. There was also some suggestion that leverage was more likely with male social groups than female ones. Registration with an AC was more likely for secular groups than religious ones. Religious-based groups in the villages did not see their activities as being ‘project orientated’ and instead regarded their role as being in community support. Social groups cannot be thought of as static and exclusive and the diversity of such groups at the village scale is a source of strength for their communities. The results have important ramifications for those institutions, especially faith-based ones, wishing to work with social groups to help in the design and implementation of development initiatives.

Mudra Loan Disbursement Among Different Social Groups

Indian banking and financial system work as a catalyst to this growth trajectory. To strengthen the micro business segment, a feather has been added under the aegis of GOI in the year 2015 to the formal lending system in the form of MUDRA. It has been a milepost accomplishment in the financial inclusion panorama. Through this system, the endeavour is to bring all the sectors into mainstream and to make financial services available to all the sectors. MUDRA provides different categories and sub-categories of formal loans at a low rate of interest according to the needs and requirements of startups and other micro enterprise units. MUDRA loans have been instrumental in providing financial support to individuals from various social groups, promoting inclusivity and empowerment. It addresses the lack of access to formal credit for individuals from different social groups, who often face difficulties in obtaining loans from traditional banking institutions due to various reasons such as lack of collateral, low income, or limited credit history. It offers customized loan products designed to cater to the specific needs and requirements of small and micro enterprises. MUDRA Credit is accompanied by various support mechanisms such as capacity building, skill development, and business mentoring. These initiatives help borrowers enhance their entrepreneurial skills, manage their businesses effectively, and improve their chances of success.
 It is important to note that MUDRA loans are not limited to any specific social group. They are available to individuals from all social groups who meet the eligibility criteria. The loans have been designed to cater to the diverse needs and aspirations of entrepreneurs across different social backgrounds, facilitating their access to formal credit and promoting entrepreneurship at the grassroots level. The present study utilizes the secondary data including government reports, surveys, and scholarly articles, and case studies, to provide an in-depth understanding of the sub-categories within the Mudra Yojana framework to assess the effectiveness and inclusivity of the Mudra Yojana in reaching marginalized communities. The study period is six years from 2016-17 to 2021-22. The Shishu category recorded the highest number of accounts i.e., 26,70,67,119 along with highest loan disbursement of Rs. 7,31,706.97 among all the categories. The study shows continuous growth among all the sub-categories (except in OBC in Shishu Loans) in all the Mudra Loans Schemes.

Asymmetric information, capacity constraint and segmentation in credit markets

PurposeThe purpose of this study is to propose a model of competition between a formal lender (bank) and an informal lender (moneylender) with informational asymmetry between these two lenders. Further, the authors introduce capacity constraint on the lending capacity of the moneylender and assume that borrowers differ in risk and wealth.Design/methodology/approachThe solution concept of Nash equilibrium has been used to derive the optimal strategies of the lenders.FindingsThe equilibrium strategies in most of the results depend on the difference between the expected returns from risky and safe projects where the risky project has higher expected returns. The credit market is segmented in terms of risk and wealth levels. Rationing of poor safe borrowers from the credit market is inevitable when the moneylender's capacity is sufficiently small, suggesting a low-income trap for them. Further, when moneylender has capacity constraint of some form, a zero-profit outcome is never a Nash equilibrium outcome.Research limitations/implicationsThere is a possibility of collusion between the lenders. However, the authors do not derive all possible outcomes under capacity constraintPractical implicationsWhen the informal lender has limited capacity, competition between formal and informal lenders may not alleviate credit rationing, instead aggravate the problem. Thus, the government should devise policies to ensure credit availability to resource poor householdsOriginality/valueWhile the literature models strategic interaction between lenders under the assumption of zero-profit (Bertrand Paradox) condition, this study shows that zero profit is not the only outcome under such a set-up. Also, in presence of capacity constraint of the moneylender, a zero-profit outcome is never a Nash equilibrium outcome for the lenders. There is an optimal contract at which the lenders differentiate in terms of repayment and collateral and earn positive profits under certain conditions.

Land-Use Rights and Informal Credit in Rural Vietnam

Access to credit and its cost are a major challenge for farmers in developing countries. Land serves as collateral for accessing formal credit, but the role that land ownership plays in accessing informal credit and determining its cost is understudied. This paper provides empirical evidence on the effects that land ownership has on both the demand for and the cost of informal and formal credit in the Mekong Delta. The results show that as land ownership increases, both the demand for and the cost of informal loans decrease, while the amount of money borrowed from formal lenders increases. The design and implementation of appropriate land redistributions seem to be a fundamental way to fight the informal credit market.

Risk factors limiting access to formal financing: Perceptions from artisanal and small-scale mining (ASM) operators in Nigeria

This paper reflects critically on why individuals engaged in artisanal and small-scale mining (ASM) struggle to obtain formal loans. Several studies have concentrated on the perceptions of formal lenders on the risks associated with providing loans to this group of miners. It is argued in this paper that understanding more about the limiting factors from the perspectives of ASM operators will provide better guidance when formal lenders scrutinise the requirements for issuing loans to this group of borrowers. In this study, face-to-face interviews were conducted with senior management officers at the Nigeria Bank of Industry (BOI) and a selected number of miners within the study area. The findings indicate that the inability of ASM operators to prove the feasibility of their operations, lack of knowledge of efficient ore reserve estimation methods, as well as lack of physical collateral are amongst the factors that make them unfavourable clients to formal lenders. The paper recommends that government considers strengthening miners’ organisations and cooperatives as a way of enhancing the access of ASM operators to formal finance.

Risks to credit access in a developing economy

Governments in developing economies are continuously seeking ways to increase the number of people that have access to formal financial services. However, literature on why households in developing economies are excluded from the formal credit sector is scarce. Thus, this study examines the link between household characteristics and the choice of credit provider using unique household-level primary data from the Niger Delta region. A binomial logistic regression model based on relevant household characteristics is developed for estimation. The results show that the number of dependents and income of a household, as well as education level and age of household head, is relevant in understanding the choice of the credit provider. Strikingly, the finding that the probability of borrowing from the informal sector increases with household distance from a formal lender at a decreasing rate suggests the significance of cost associated with traveling to the nearest bank on the choice of a lender and the presence of information asymmetry in the credit market of the region. Overall, the study raises important implications to inform credit market policies and practices in the region.

Informal Lending Practices and Profitability of Rice Retailers in Borongan City

This correlational study explored the relationship between informal lender’s practices and profitability of fifty-three (53) rice retailers in city of Borongan using a researcher-made-three part questionnaire on the business profile, level of practices among informal lenders and weekly income of the respondents. Data were sourced out from rice retailers who lent sum of money from “5-6” informal lenders, and were utilized using descriptive and inferential analysis test at .05 level of significance. Findings revealed that Majority of the respondents had been in the middle years of retailing business, used an average initial capital sourced out from their personal savings and are earning an average weekly income. The respondents’ perceived that informal lenders assess clients’ financial needs and willingness to pay without requiring collateral from them and that rice-retailers reloan due to fast processing of funds and the great customer service. Using regression analysis, year in business was found to be a significant predictor of increase in the profitability of rice retailing services. While, no significant relationship was seen between the rice retailers’ weekly net income and the level of practice among informal lenders. The researcher recommends that government and non-government agencies to provide intervention that will improve the microbusiness enterprise in the market using the help of informal and formal lending institutions and that wider scope of the study should be made to include other small business sectors that are affected by informal lenders.

Research on the Risk of the Online Lending Market in China: A New Perspective Based on MF-DCCA

ABSTRACT This paper examines the risk in the online lending market by analyzing the cross-correlation between formal (Shibor) and informal lending markets (including online and offline lending markets) in China using the multifractal detrended cross-correlation analysis (MF-DCCA) approach by employing time series data of interest rates covering the period from July 20, 2015, to January 17, 2020. The results reveal cross-correlations between Shibor and offline lending markets and between the online and offline lending markets in both the short and long terms. In addition, the nonlinear Granger causality test showed significant bidirectional causality between Shibor and the offline lending interest rate, and offline lending was the cause of online lending. No obvious causality relationships were noted between Shibor and online lending. The cross-correlation analysis for markets supported further strengthening of regulations of online lending markets.

Bondsmen: Slave Collateral in the 19th-Century Cape Colony

During the 18th and 19th centuries, enslaved people in the Cape Colony were used as collateral on loans. In the near absence of formal lending institutions, private credit agreements predominated among slave-owners, as researchers have established in earlier studies. Based on a sample of 19th-century mortgage records, I use network analysis in this article to visualise the flow of credit among slave-owner debtors and creditors, showing the position of banks in a network dominated by private creditors and highlighting the role of widows in the male world of credit. The context of emancipation brought insecurity and upheaval to the colony and appears to have slowed the pace and diminished the size of loans offered on slave collateral. Yet emancipation on 1 December 1834 was not the end of the practice, as might be expected. Rather, it continued in two ways: first, mortgages on slave collateral agreed before emancipation continued with unchanged terms into the period of apprenticeship; secondly, new mortgages were agreed after emancipation on the basis of apprenticed labour and future compensation payments. The way in which compensation – in cash and years of labour – was organised secured former slave-owners’ access to credit in the transition from slavery to wage labour.

EFFECT OF CREDIT UTILIZATION ON THE PRODUCTIVITY OF SMALL-SCALE COWPEA FARMERS IN SELECTED LOCAL GOVERNMENT AREAS OF NIGER STATE, NIGERIA

Small-scale farmers use their meagre household resource to finance their agricultural production. The study investigated the effects of credit utilization on the productivity of small-scale cowpea farmers in the selected Local Government Areas in Niger State, Nigeria. Data were obtained from 212 respondents comprising of 98 credit and 114 non-credit users through the administering of questionnaire. Data were analysed using descriptive statistics, Ordinary Least Squares (OLS) regression, Data Envelopment Analysis (DEA) and Additive Multiplication Dummy Variable Approach (AMDVA) The study found that access to credit, farm size and distance to farm were the significant factors affecting the farmers’ productivity. Results specifically revealed that access to the credit had a significant effect on the productivity of the cowpea farmers at P≤0.01 probability level. Late disbursement and unavailability of bank in the communities were found to be major problems limiting farmers’ access to credit. The study recommended sufficient availability of credit facilities to the farmers through government interventions to enhance farmers’ incomes and productivity, and also, farmers should be encouraged to form co-operative societies so as to enable them have access to credit facilities from formal lending institutions.

English

Credit is an important instrument used to improve the welfare of the poor. It could enable the rural households in overcoming liquidity problems, enhancing productive capacity and adopting new technologies. In Ethiopia, the government is promoting microcredit services, but the participation of rural households for credit service is limited. Inappropriate use of loan money also exacerbated the challenges in achieving the desired goal, and consequently, it influenced the loan repayment performance of the household. Therefore, this study was conducted with the aim of identifying socioeconomic factors prompting farm households` participation in Omo Microfinance services and factors determining the utilization of loan money for proposed activities. To conduct this study, 120 rural households were selected randomly from 6 kebeles of Damot Gale District. The participation decision of the households in the credit market and factors determining the level of credit utilization for proposed activity are analyzed using double hurdle model. The study result shows that distance to formal lending institutions, education status, total livestock unit and frequency of contact with extension agents have significantly influenced access to credit. The second hurdle of the model reveals that amount of loan received, peer-monitoring system, expenditure in social festive and frequency of contact with extension agents affected the performance of loan utilization. Therefore, minimizing the barriers of access to credit and considering factors affecting loan money utilization for proposed activity is vital to achieve the desired goal.   Key words: Credit, credit market participation, loan utilization, Omo microfinance, Damot Gale.

Effets des transferts de fonds internationaux sur l'utilisation du crédit par les exploitants agricoles au Mali

Cet article vise à analyser les effets des transferts de fonds des migrants internatio- naux sur l'utilisation du crédit par les exploitants agricoles au Mali. La méthode des scores de propension a été utilisée pour corriger l'endogénéité liée aux transferts de fonds. L'étude concerne 9040 exploitants dont les données sont issues de l'enquête Agricoles de Conjonc- ture Intégrée pour la campagne agricole 2017-2018. Les résultats révèlent une absence d'effet des transferts de fonds sur l'utilisation du crédit global par les exploitants agricoles. Cependant, les résultats selon les sources montrent un effet négatif pour le crédit formel en raison du crédit intrants et semences de la Compagnie Malienne de Développement des Textiles (CMDT). Les crédits institutionnels (banque et microfinance) et informels ne se sont pas révélés significatifs. Cette absence d'effet, du côté des prêteurs institutionnels, est liée à la l'inutilisation du canal des prêteurs formels pour l'envoi de fonds et par le niveau élevé du risque de l'activité agricole, d'une part, et par l'incapacité des établissements financiers de développer des produits adaptés aux besoins des exploitants. Du côté des prêteurs informels, elle se justifie par l'insuffisance des montants des transferts obligeant les exploitants à toujours recourir à ce marché.

Firms’ Financing Choices and Firm Productivity: Evidence from an Emerging Economy

Emerging economies can compete in the global markets only through productivity improvements. Most firms in developing economies are inefficient, making misallocation of resources highly likely. Finance is not only a factor of production but also a facilitator of other factors of production. When finance is misallocated, the aggregate productivity and firm competitiveness deteriorate. Formal financial intermediaries are expected to mitigate misallocation through efficient screening. Small firms, that form most of the firms in developing economies, often do not have enough information to facilitate efficient screening. Under these circumstances, are formal lenders able to allocate capital efficiently? What are the factors that determine access to finance and firm productivity? Does access to finance improve firm productivity? This study attempted to answer these questions by analysing Indian small firms. In the first stage of the analysis, Data Envelopment Analysis was used to estimate relative efficiency, which was used in a simultaneous equations model in the second stage. The results indicated that despite the lenders preferring highly efficient firms, external finance was detrimental to productivity. The interest of the formal lender is in the quick and safe repayment of the loan whereas the return on productivity improvements can only be realised in the long-term. It is argued that this mismatch causes formal finance to hamper the productivity of funded firms. Without facilitating productivity improvements, external finance cannot provide sustainable growth and firms cannot compete in the global markets. Consequently, the country may never graduate to the next stage of economic development.

Co-funding as an alternate lending mechanism

Informal finance, in the past, has been identified to act as an alternative information channel for formal lenders. With evidence for the complementary role of formal and informal finance on the rise, this study investigates if informal finance could help firms work around the lending technologies adopted by formal lenders and thereby help small firms access the scalable formal finance. This is especially insightful for developing economies and small firms that are more financially constrained. Employing non-recursive path model, we identify that through co-funding firms that lack information, collateral or lending relationship access formal finance. Additionally, we also document the significant role played by firm profitability in lending decisions. The findings imply that the benefits of co-funding can be channelled to create a better financial environment for firms that would normally be unserved by the formal financial sector.

Credit constraint and intra-country production reorganization – Evidence from the unorganized textile industry in Maharashtra

PurposeEvidence suggests that unorganized manufacturing units are extremely credit-starved. The purpose of this paper is to study the effect of such credit unavailability for small firms, and to see if it has altered the erstwhile production organization in a way which has led to the withdrawal of the small firms from both input and output market, leading to increased production outsourcing between the formal and informal firms.Design/methodology/approachBased on data collected from two textile clusters in Maharashtra, India, the study shows that credit unavailability has led small firms to increasingly work for bigger firms as outsourced units. The paper uses a measure of technology and productivity to undertake logistic regression and sub-sample regressions to confirm production reorganization resulting from credit unavailability. This would provide additional insights for standard measures of intra-country intra-industry tradeFindingsThe exclusion of the unorganized production units from the formal lending process has, over the years, led to a reorganization of the existing production structure, whereby the small firms are forced to work for bigger formal firms on piece-rate basis. To circumvent their credit issues, the small unorganized sector firms have increasingly started to work for bigger firms as outsourced units.Originality/valueThis is an original research work. The paper fulfils the identified need of addressing how the plaguing social issue of financial exclusion of unorganized firms has led to production reorganization.

Analysis of Factors Enhancing Credit Utilization Among Lowly Endowed Women Farmers

Credit is an important aspect in farming. The problem is the restricted accessibility to farm credit by the Lowly Endowed Women (LEW) farmers. The banks and other formal lending institutions consider LEW farmers a risk and/ or not credit worth. To be unveiled yet are the strategies and interventions that ought to be put in place so as to enhance credit use by Lowly Endowed Women farmers. The research was done on women farmers in Funyula Sub County, Busia County, Kenya. A sociological inquiry, in form of a survey was used to collected field data based on the views of the LEW farmers on the various credit arrangements to determine which ones were acceptable and could lead to both effective use of credit and high. In addition to the field survey, case studies were carried out for additional data and to strengthen the findings of the field survey. The target population was the women farmers. All the 15,000 households Funyula Sub County (Ministry of Agriculture, 1997) constituted the accessible population. The study assumed every household had a woman. For case studies, the study population was chosen from the on-going or immediate past rural programmes with an informal credit component for lowly endowed people, particularly the women. Sampling of the household was undertaken using a proportionate, stratified random sampling technique on sub locational basis. The sub county had 28 sub locations. All the Sub Locations were represented in the study. A sample of 210 LEW farmers was taken. For the case studies, agencies that had a credit component for the lowly endowed people were selected. Three credit programmes run by two agencies with fairly successful record of credit support to the poor were studied. These agencies included an NGO, Kenya Rural Enterprise Programme (K-REP) and a government/ bilateral donor assisted agency, the DANIDA which supported Kitui Agricultural Project (KAP). Field data was collected by the researcher. The Statistical Package for the Social Sciences (SPSS) was used to aid the analysis of the data. Chi-square was used to test the relationship between the variables. The level of significance for the relationship between variables was rejected or accepted at p ≤ 0.05 significant level. The findings of the study were: There is no significant relationship between conditional credit and effective use of credit. However, there is a positive relationship between unconditional credit but with strict supervision by the credit agency and effective use of credit. The result of relationship between pre-training and use of credit indicated is a positive relationship between pre-training and effectiveness of credit use. On credit in-kind, it was found to be positive relationship implying credit in-kind is put to effective use by the LEW farmers. Keywords: Credit utilization, Lowly Endowed Women, Farmers DOI: 10.7176/JESD/11-4-08 Publication date: February 29 th 2020

Analysis of Factors Enhancing Credit Repayment Among Lowly Endowed Women Farmers

While credit support is an important factor in enhancing agricultural production, the problem is the restricted accessibility to farm credit by the Lowly Endowed Women (LEW) farmers. The banks and other formal lending institutions consider LEW farmers a risk and/ or not credit worth. To be unveiled yet are the strategies and interventions that ought to be put in place so as to enhance credit repayment by Lowly Endowed Women farmers. The research was done on women farmers in Funyula Sub County, Busia County, Kenya. A sociological inquiry, in form of a survey was used to collected field data based on the views of the LEW farmers on the various credit arrangements to determine which ones were acceptable and could lead to both effective use of credit and high credit repayment rate. In addition to the field survey, case studies were carried out for additional data and to strengthen the findings of the field survey. The target population was the women farmers. All the 15,000 households Funyula Sub County (Ministry of Agriculture, 1997) constituted the accessible population. The study assumed every household had a woman. For case studies, the population was chosen from the on-going or immediate past rural programmes with an informal credit component for lowly endowed people, particularly the women. Sampling of the household was undertaken using a proportionate, stratified random sampling technique on sub locational basis. The sub county had 28 sub locations. All the Sub Locations were represented in the study. A sample of 210 LEW farmers was taken. For the case study, agencies that had a credit component for the lowly endowed people were selected. Three credit programmes run by two agencies with fairly successful record of credit support to the poor were studied. These agencies included an NGO, Kenya Rural Enterprise Programme (K-REP) and a government/ bilateral donor assisted agency, the DANIDA which supported Kitui Agricultural Project (KAP). Field data was collected by the researcher. The Statistical Package for the Social Sciences (SPSS) was used to aid the analysis of the data. Chi-square was used to test the relationship between the variables. The level of significance for the relationship between variables was rejected or accepted at p ≤ 0.05 significant level. The findings of the study were: credit rating appeared unpopular method of assessing the credit worth of the respondents and was rejected. On peer pressure, the finding showed a positive relationship between peer pressure and credit repayment among the LEW farmers. The relationship between savings and credit repayment was found to be, statistically not significant. Lastly, the study findings indicated a positive relationship between assurance of continued credit support on completion of the ongoing one and credit repayment. Keywords: Credit Repayment, Lowly Endowed Women Farmers DOI: 10.7176/JBAH/10-4-05 Publication date: February 29 th 2020