Agricultural Studies, Vol. 2, Issue 1, Feb  2018, Pages 58-69; DOI: 10.31058/ 10.31058/

Analysis of Factors Influencing Farmers Loan Repayment Capacity in Abia State

Agricultural Studies, Vol. 2, Issue 1, Feb  2018, Pages 58-69.

DOI: 10.31058/

Mgbasonwu Vincent Nwabinye 1* , Umejiaku Emmanuel 2

1 Department of Agricultural Economics, College of Agricultural Economics Rural Sociology and Extension, Michael Okpara University of Agriculture, Umudike, Abia State, Nigeria

2 Department of Agribusiness and Management; College of Agricultural Economics Rural Sociology and Extension. Michael Okpara University of Agriculture, Umudike, Abia State, Nigeria

Received: 30 November 2017; Accepted: 8 January 2018; Published: 28 February 2018

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This study analysis of factors that affect loan repayment capacity of farmers was carried out in Abia State Nigeria. The aim is to identify the socio-economic profile of the farmers, examine the factors influencing loan repayment capacity and identify the major problems and challenges faced by farmers in the repayment process. A total of 60 respondents were used in the survey. Descriptive statistics and multiple regressions were employed in analyzing the data. Most of the respondents were literate with different educational level. Half of the respondents were married largely the farmers used the entire loan for running the proposed business. The result of the multiple regression analysis shows that coefficient of multiple determination, was highly significant and in compliance of the signs to a priori expectations. The coefficient of R-Square was 0.6237 implying that 62.37% of the variation in the farmers’ loan repayment capacity was explained by the independent variables included in the model. The F-value of 5.43 is greater than the tabulated value at both 5% (2.13) and 1% (2.88) levels of significance. The major factors influencing loan repayment includes Farming Experience, Amount Borrowed, Farm Size, Interest Rate, Farmers Age, and Sex were significant at 10, 5 and 1 percent respectively, implying that these variables are very important factors influencing the amount of loan repaid by the farmers in Abia State. Respondents identified the major challenges in the loan repayment process as inadequate loan size, unavailability of grace period and weak in following up to recover loans amongst other issues. It is recommended that Federal Government should fashion and enforce a programme for farmer’s development strategy under the Agricultural Development Bank that will guarantee adequate credit to farmers and financial institutions should address the issue of inadequate credit extended to local farmers.


Agricultural, Loan, Repayment, Capacity, Performance, Efficiency, Policies, Intervention


© 2017 by the authors. Licensee International Technology and Science Press Limited. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.


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