Microeconomic analysis of the factors affecting agricultural borrowing in Nepal
1988
Sushil Ram Mathema (Thammasart Univ., Bangkok (Thailand). Faculty of Economics)
Purpose of this study was to examine the contribution of different credit sources in agriculture and analyse the important factors affecting on the borrowings of the farm families living under different topography. There is positive association between borrowing from institutional credit sources and large size group of farm families in the area selected from Terai region. The nature of association between size groups of farm families and borrowing from institutional credit source is however ambiguous in the area selected from Hill region. Non-institutional sector still plays active role in the agricultural credit market, the more prominent picture being observed in the area selected from Hills. The insufficient collateral required tobe pledged for institutional loan was one of the root causes that the non-institutional sector is still active in agricultural credit market. The study revealed that as reported by the farmers the major part of loan amount contributed by the institutional sector has gone to the purpose of farm and capital expenditure while that of non-institutional sector to the family expenditure. Small farmers are charged with higher rate of interest than the large farmers in the area selected from Hills. Empirical results showed that the farmer's accessibility to different sources of credit depends mainly upon the position of his total income, outstanding debts, value of assets and seasonality. Also, the major determinants of the agricultural borrowing were found to be capital expenditure, family expenditure and value of assets. The total variation in the magnitude of borrowing amount due to unit change in capital expenditure and family expenditure is remarkably different between Khopasi (Hills) and Anandaban (Terai).
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