Publication | Open Access
Determinants of access to credit financial services by smallholder farmers in Kenya.
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2015
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Rural EconomyEconomic DevelopmentDevelopment EconomicsAgricultural EconomicsCredit Financial ServicesEducationSmallholder FarmersAgricultural FinancePovertyAfrican DevelopmentEconomicsPublic PolicyFood SecurityCredit MarketLoansFinanceCredit Financial AccessBusinessFinancial InclusionCredit AccessFinancial MechanismFinancing
Credit financial access is considered essential for sustainable rural development, household food security, and poverty reduction. The study aimed to identify the main factors influencing smallholder farmers’ access to credit financial services in Kenya. Logistic regression shows that higher education, occupation, and extension service access positively influence credit access, while higher household income and greater distance to credit sources negatively affect it, suggesting that establishing nearby credit offices, enforcing in‑kind lending, and implementing enabling policies can improve equitable credit access. Key words: determinants, credit access, credit financial services, smallholder, Kenya.
Credit financial access has been argued to be the engine of sustainable rural development and a factor necessary for household food security and poverty reduction. This study sought to establish the main factors that affect smallholder farmers’ access to credit financial services in Kenya. The logistic regression results indicates that, the marginal effects of education level, occupation and access to extension services were statistically significant with positive effects on access to credit financial services. However, total annual household income and the distance to the credit source were statistically significant with negative influence on access to credit financial services. Overall, this paper concludes with implication for policy to establish credit/loans offices close to farmers in order to reduce lending procedures, risks, and educate them on perceptions on loan repayment. Moreover, the government should enhance the enforcement of credit input services in the form of in-kind lending to reduce fungibility into consumption expenditures. Finally, to realize food security, increased economic outcomes, and reduce poverty, it would be necessary to invoke enabling policy mechanisms to realizing equitable access to credit by smallholder farmers. Key words: Determinants, credit access, credit financial services, smallholder, Kenya.