ADUGNA T., HEIDHUES F.
Abstract
Like in many developing countries, the informal credit sector is of paramount
importance among the Ethiopian rural communities. However, there is limited
information about the sector. With the aim of contributing to this information,
this study has attempted to examine farm households' demand for informal credit
in kind, in cash and their aggregate using cross-section data. It was found
that literacy of farm household head, number of children, size of cultivated
land, number of oxen, number of small ruminants, land tenure, particularly rented-out
land, and off-farm income have significant influence on farm households' demand
for informal credit. The results have also revealed that different combinations
of the above explanatory variables affect the demand for different types of
informal credit. These empirical findings have a number of policy implications
for designing and delivering credit facilities to farm households.
Key Words:
cash, demand, farm household, food crops, informal credit