Determinants of Farmer’s Participation in Formal Microcredit Markets in Benin

Abstract

This study analyzed the factors that affect farmers’ participation in formal credit programs in Benin. The data were collected from 400 randomly selected farmers in 20 villages representing 7 Agricultural Development Hubs (ADHs) of Benin. The estimate was made with a double hurdle model. The results indicate that gender, contact with extension services, perception of agricultural activities’ risks negatively affect the probability of access to credit. Educational level, farm management experience, cash crop area and organized group membership positively affect the satisfaction rate of credit demand. Age has a negative impact on satisfaction rate of credit demand. Credit management experience, information on credit obtaining opportunities and the perception of credit access conditions influence both credit access probability and satisfaction rate of credit demand. But the influences go in opposite directions. If the influence is positive on the credit access probability, it negatively affect satisfaction rate of credit demand.