Why Worry About Informal Money Lenders Patronage? A Research Agenda: Evidence From Delta State, Nigeria

Year 2019, Volume: 2 Issue: 2, 71 - 78, 01.04.2019

Theophilus Miebi Gbıgbı

Abstract

Credit
access will propel economic activities to increase the performance of the
farmers to move from everyday for survival to planning for the future. This
study assessed informal money lenders patronage by farmers in Delta State,
Nigeria. Multistage random sampling procedure was used in the study. Primary
data were obtained from 240 borrowers using structured questionnaire and
interview schedule. Descriptive statistics, t-test and probit regression
analysis were used for the analysis. The result of the study indicated that
54.9% of borrowers had an age range of 34-53 years. Majority of the borrowers
were males (77%), married (78.8%), educated (96%) with household size of
1-5persons (48%). About 59% had farm size of less than one hectare while 49.6%
of borrowers earned income less than N 100,000. The result of the probit
regression analysis showed that patronage of informal money lenders were
influenced by education, occupation, household size, farm size, marital status,
effectiveness and location. The result of t-test confirmed that there was
significant relationship between socioeconomic characteristics of smallholder
farmers and informal money lenders patronage in the study area. The result
indicates that loans from informal money lenders have helped overall
performance. The major constraints of borrowers were high interest rate, small
volume of cash disbursed and collateral requirement. This requires government’s
intervention through the regulation of the activities of informal money lenders
with respect to interest rate charged so as to reduce debt burden worries among
small-scale farmers.

Keywords

Probit, money lender, patronage

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