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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:Determinants of smallholders' transaction cost of procuring non-bank loans in Nigeria
Author:Olomola, Ade S.
Year:1999
Periodical:Savings and Development
Volume:23
Issue:1
Pages:95-108
Language:English
Geographic term:Nigeria
Subjects:agricultural credit
small farms
External link:https://www.jstor.org/stable/25830681
Abstract:The involvement of non-bank institutions in credit delivery in Nigeria has been one of the ways of encouraging participation of small-scale farmers in formal credit programmes. To date, however, the use of formal credit by most of these farmers is still highly restricted. One of the critical constraints is the high cost of borrowing. Using data from borrowers who participated in the small-scale farmers' credit scheme in 1985, specifically 157 borrowers from the Ondo State Agricultural Credit Corporation and 174 borrowers from the Ekiti-Akoko Agricultural Development Project, also in Ondo State, the author determined the components of the transaction costs associated with borrowing from non-bank institutions, and analysed their determinants. He found that over and above interest payments, small-scale farmers procuring credit from non-bank institutions incurred transaction costs amounting to about 8 percent of the loan amount. Administrative expenses constituted the highest proportion of these costs. The borrowing transaction costs were significantly affected by the size of the loan, the borrower's distance from the loan office, and loan disbursement lag. Bibliogr., sum. in English and French.
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