Estimating farmers' intention towards institutional credit adoption by using extended theory of planned behavior

The role of socio-psychological factors on farmers' institutional credit adoption intention is rarely studied in the context of developing nations. This study estimates the direct and mediating association of various socio-psychological factors with farmers' institutional credit adoption intention. An extended theory of planned behavior (TPB) was adopted and empirically tested using the cross-sectional data from 384 farmers from West Bengal. The study used structural equation model for the mediation analysis. Results showed that primary TPB constructs like attitude, subjective norm, and perceived behavioral control were positively and significantly associated with the intention of institutional credit adoption. Besides direct effect, the primary TPB constructs mediated the relationship between institutional credit adoption intention and other explanatory constructs used in this study. Findings predicted a positive partial mediation between trusted information sources, formal education level, coping appraisal, risk perception, and farmers' formal credit borrowing intention. Risk perception displayed a direct and mediated, however, negative, association with farmers' institutional credit adoption intention. These findings provide a clear understanding of factors predicting farmers' intention to adopt institutional credit and comprehensive insight into establishing policies for effective institutional lending at the ground level. The study delivers a paramount scientific perspective to the policymaker of developing countries suffering from insufficient institutional credit penetration in the farming community to design practicable frameworks and incentivize policies to motivate farmers in institutional credit borrowing.