Impact of Micro Credit on Rural Farming Activities: The Case of Farming Communit
开篇：润墨网以专业的文秘视角，为您筛选了一篇Impact of Micro Credit on Rural Farming Activities: The Case of Farming Communit范文，如需获取更多写作素材，在线客服老师一对一协助。欢迎您的阅读与分享！
[a]Faculty of Economics and Business Administration， Catholic University College of Ghana， P. O. Box 363， Sunyani， Ghana.
*Corresponding author.
Received 12 September 2013； accepted 6 December 2013
Abstract
Most MFIs especially rural banks have performed creditably well in their operations and have contributed a lot towards agricultural development. The study seeks to investigate the impact of micro credit on farming activities but specifically to determine the impact of micro credit on labour employed， working capital， output and income of farmers and other forms of support rural banks give to farmers. A total of 103 farmers were randomly selected from farmer clients of a rural bank to respond to close-ended questions. Paired samples t-test was run to determine the differences and impact of the credit intervention on the four dependent variables. A modified Eta squared formula and paired samples correlation were used to determine the impact of the independent on the dependent variables.
The result found significantly large effect of the micro credit intervention on the labour employed， working capital， output and income of farmers. All the dependent variables had increased during the period under study although all the increases cannot be attributed to the credit intervention only. Apart from the credit， other forms of support given to farmers include improved and subsidized farm inputs like fertilizer， seedlings and other inputs.
Key words： Micro credit； Rural banks； farming activities
Ellis Kofi Akwaa-Sekyi （2013）. Impact of Micro Credit on Rural Farming Activities： The case of farming communities Within Sunyani Area. Management Science and Engineering， 7（4）， 23-29. Available from： URL： http：/// index.php/mse/article/view/j.mse.1913035X20130704.2975 DOI： http：///10.3968/j.mse.1913035X20130704.2975
INTRODUCTION
It has been the vision of well-meaning governments to ensure the development of rural areas and better the lots of rural dwellers. Ghana， as an agrarian economy has significant proportions of its dwellers in the rural areas. Farming and for that matter agriculture contributes significantly to the country’s GDP. Rural development has been a topical issue in most parts of Sub-Saharan Africa. Terluin （2003） indicated that economic development of rural areas has been determined externally by the state， where big issues such as modernization in agriculture took priority over local sensitivities. Writing on rural development in the UK， Mason （2008） emphasized home-based businesses as pivotal to developing rural economies. Mason defined home-based business as any business entity engaged in selling products or services into the market operated by a self-employed person， with or without employees that uses residential property as a base from which they run their operation. The definition was expatiated by Newbery and Bosworth（2010） as businesses that covered sectors which included agriculture. Such businesses have the potential to champion the economic， social and environmental benefits linked to local development， job creation and community vitality. Thus anytime there is a call to pursue rural development， agriculture cannot be left behind. Newbery and Bosworth （2010） made strong cases for home-based business as vital for developing the rural economy and the rural dweller. This paper focuses on agriculture as a backbone for rural development and the rural farmer. Rural banks through their credit facilities contribute to agricultural development and the welfare of the farmer.
According to Gillis （1996）， agriculture’s role in economic development is central in LDC’s because most of the people in these nations make their living from the land and the only ways that those peoples’ welfare can readily be improved is by helping to raise the farmers’ productivity in growing food and cash crops. According to Chatrath and Vallabh （2006）， the rural population in India suffers from a great deal of indebtedness and is subject to exploitation in the credit market due to high interest rates and the lack of convenient access to credit. Rural households need credit for investing in agriculture and smoothening out seasonal fluctuations in earnings.
Difficulties in accessing credit in rural areas of developing economies adversely affect farm output （Feder et al.， 1990； Petrick， 2004） farm investment （Carter & Olinto， 2003） and farm profits （Carter 1989； Foltz 2004）. Osei-Mensah and Adams （2009） found that micro credit had significant and positive impact on both labour force and output of farmers. Dong， Lu and Featherstone （2010） indicated that rural credit is a necessity for improving farm profits and improving the living standards of rural communities in developing countries. The writers found that by removing credit constraints， the income of farmers would improve considerably.
Ibrahim and Bauer （2013） mentioned that the most significant interventions provided by microfinance institutions in the support of agriculture are the supply of improved seedlings， fertilizer and cash loans.
2. METHODOLOGY
The study involved 103 rural farmers who are clients of a rural bank within the Sunyani municipality. A total of 150 questionnaires were distributed thus representing a response rate of 68.7%. The main source of data was the primary source through the use questionnaire. The items were basically closed-ended questions the purpose of which was to give direction to the responses. The study involved both quantitative and qualitative analyses. One hypothesis was tested and four key variables were measured using paired samples t-test to establish whether significant differences existed in the variables after the introduction of the micro credit intervention. The variables were labour force， capital， output and income. A modified Eta squared formular was used to determine the effect size of the intervention. To determine the size of effect of the micro credit on rural farmers， the researcher used the Eta squared which is given by the formular：
where t = t-value and N1= degrees of freedom （df）
Pallant （2010） cited Cohen， （1988） who interpreted the eta squared values using the following guidelines： 0.01 = small effect， 0.06 = moderate effect， 0.14 = large effect.
The effect size of the impact of credit on labour force employed is calculated as：
The effect size obtained （0.398） above suggests that there is large effect of the credit facility on the labour force employed by farmers.
The effect size of the impact of credit on capital is calculated as：
4. PAIRED SAMPLES T-TEST ON DIFFERENCES IN VARIABLES BEFORE AND AFTER RURAL CREDIT
Paired samples t-test is a type of analysis that tests whether there are significant differences between variables especially after the introduction of an intervention. There were four variables of interest which were labour force employed， capital， output and income. These variables were compared between two periods. Period 1 represents the period before the introduction of the intervention which in this case is the credit and Period 2 which is the period after farmers had received credit and other support from the bank.
The paired samples statistics table shows differences in means and standard deviations on the labour force employed， capital， output and income before and after the introduction of the credit scheme. The mean labour force employed before the introduction of the micro credit was 3.87 （with standard deviation 1.426） which increased to 4.27 （with standard deviation 1.270） after the introduction of the loan. This can be seen in Pitt and Khandker（1998） that the client on the program could gain from participating microfinance programmes in many ways. The means indicate an increase in labour force employed after the rural bank intervention.
On assessing the contributions of rural banks towards agricultural developments， it was established that apart from giving the farmers credit， the rural banks contribute to agriculture development in the form of provision of fertilizers， farm implement， improved seedlings and other forms of support. This is done as loyalty to their customers and also to attract new customers. This helps the famers to minimize their farming cost in the form of purchasing fertilizers and other farm implements at reduced prices or for free. This is because the money which would have been used to purchase the fertilizer can now be channeled to other avenues such as hiring of extension officers. The result is consistent with ADB and ADF （2000） which reported that the rural farmers usually suffer from poverty and may have difficulty purchasing farm inputs； therefore， the provision of fertilizers and other farm implements by rural banks will cushion them. This in a way will solve part if not all the poverty issues among rural farmers.
CONCLUSION
It could be concluded from the study that， there are more males than females in farming within the area of study whose ages range between 30-49 years with a long standing relationship with rural banks. This long relation could increase their loan cycles and minimize default which could make the banks sustainable to support farmers.
There is significantly large effect of rural credit on labour force employed by farmers， capital for farming， output and income of farmers. There have been significant increases in the labour employed， capital， output and income as well as significant positive correlation between rural credit （independent variable） and labour force employed， working capital， output and income of farmers（dependent variables）. This is to say that as rural credit is increased， labour force， capital， output and income could increase accordingly to better the lot of the rural farmer.
Apart from credit facilities， rural banks support farmers through the provision of fertilizers， farm implement， improved seedlings and other forms of support. These forms of support help to deepen the banker/customer relation and financial intermediation within the rural communities.
On the whole， rural banks have made and continue to make significant positive impact on farmers through the provision of credit facilities and other forms of support thereby reducing their poverty situation. The credit facilities have brought about improvements in the number of labour force employed， working capital， output and income of farmers in rural areas.
REFERENCES
Adepoju， B. A. （2005）. An appraisal of the effect of microcredit schemes on poverty reduction among women in rural communities of Kano State， Nigeria. International Academy of African Business and Development， Vol. 6， pp. 354-362.
African Development Bank （ADB） & African Development Fund （ADF）. （2000）. Agriculture and rural development sector bank group policy. Retrieved from http：//www. /fileadmin/uploads/afdb/Documents/PolicyDocuments/10000032-EN-AGRICULTURE-ANDRURAL-DEVELOPMENT-SECTOR-BANK-GROUPPOLICY-FINAL-VERSION.PDF
Agabin， M.， & Daly， J. （1996）. An alternative approach to rural financial Intermediation. The Philippine experience. Occasional Paper， Chemonics International， Washington， D.C.
Akinsoye， V. O. （2006）. Agricultural development project and food crop production in Nigeria in the 70s. Nigerian Agricultural Development Studies， 1（1）， 100117.
Arzeno， A. （2004）. Record keeping in farm management. College of Agriculture and Biological Sciences， South Dakota State University， Brookings. Retrieved from http：//pubstorage. sdstate.edu/AgBio_Publications/articles/ExEx5054.pdf
Asiedu-Mantey， E. （2011）. Rural banking in Ghana. Combert Impressions Ltd.
Bank of Ghana annual report. （2011）. Retrieved from http：// www.bog.gov.gh
Bolarinwa， K. K.， & Fakoya， E. O. （2011）. Impact of farm credit on Farmers’ socio-economic status in Ogun State， Nigeria. Journal of Social Science， 26（1）， 67-71.
Burgess， R.， & Pande， R. （2005）. Do rural banks matter？ Evidence from the indian social banking experiment. American Economic Review， 95（3）， 780-795.
Carter， M. R. （1989）. The impact of credit on peasant productivity and differentiation in nicaragua. J. Develop. Econ. pp， 31（1）， 13-36.
Carter， M. R.， & Olinto， P. （2003）. Getting institutions “right”for whom？ Credit constraints and the impact of property rights on the quantity and composition of investment. Ame. J. Agric. Econ.， 85（1）， 173-186.
Chatrath， S.， & Vallabh， G. （2006）， role of banks in agriculture & rural development. The Chartered Accountant， 1122-1130.
Dong， F.， Lu， J.， & Featherstone， A. M. （2010）. Effects of credit constraints on productivity and rural household income in China. Centre for Agricultural and Rural Development， Iowa State University. Retrieved from http：//www.card. iastate.edu/publications/DBS/PDFFiles/10wp516.pdf
Essel， T. T.， & Newsome， M. A. （2000）. Effectiveness of institutional credit for rural development in Africa： A control-case study of rural banks in Ghana. Journal of Sustainable Development in Africa， 2（1）.
FAO. （1994）. “Rural Poverty in the 1990s” in Rural Development Special No. 15. Accra， Ghana： Ghana Universities Press.
Feder， G.， Lau， I.， Lin， J.， & Luo， X. （1990）. The relationship between credit and productivity in Chinese agriculture： A microeconomic model of disequilibrium. Ame. J. Agric. Econ. 72（5）， 1151-1157.
Foltz， J. D. （2004）. Credit market access and profitability in Tunisian agriculture. Agric. Econ.， 30， 229-240.
Gillis， M. （1996）. Economics of Development （3rd ed.）. London： W. W. Norton & Company.
Hakenes， H.， Schmidt， R.， & Xie， R. （2009）. Regional Banks and Economic Development： Evidence from German Saving Banks. Retrieved from http：//www.wiwi.uni-frankfurt.de/ professoren/schlag/dgf2009/Contribution128.pdf
Hulme， D.， & Mosely， P. （1996）. Finance against Poverty（Vol.1-2）. London Rout Ledge.
Ibrahim， A. H.， & Bauer， S. （2013）. Access to micro credit and its impact on farm profit among rural farmers in dryland of Sudan. Global Advanced Journal Research on Agricultural Science， 2（3）， 88-102.
Jenyo， G. K. （2002）. Performance appraisal of community banks in nigeria （Unpublished doctoral thesis）. Department of Business Administration， University of Ilorin， Nigeria.
Mason， C. M. （2010）. Invisible businesses： The characteristics of home-based businesses in the UK. Presentation to the Centre for Knowledge， Innovation， Technology & Enterprise， Newcastle University， Newcastle upon Tyne. doi： 10.1080/00343401003614241.
Mohieldin， S.， & Write， W. （2000）. Formal and informal credit markets in Egypt. Center for Economic Policy Research， 48（3）， 657-670.
Nair， A.， & Fissha， A. （2010）. Rural banking： The case of rural and community banks in Ghana. Agriculture and rural banking discussion paper， 48， World Bank， Washington.
Newbery， R.， & Bosworth， G. （2010）. Home-based business sectors in the rural economy. Society and Business Review， 5（2）， 183-197.
Nimoh， F.， Addo， K.， & Tham-Agyekum， E. K. （2011）. Effect of formal credit on the performance of the poultry industry： The case of urban and peri-urban Kumasi of the Ashanti Region. Journal of Development and Agricultural Economics， 3（6）， 236-240.
Obadan， M. （1997）. Analytical framework for poverty reduction： Growth versus other strategies. Selected Papers for the Nigerian Economic Society Conference （pp. 367-382）. Ibadan.
Ojo， S. O. （2003）. Productivity and technical efficiency of table egg production in Nigeria， Int. J. Poultry Sci.， 2（6）， 459-464.
Okunmadewa， F. （2003）. Poverty and agricultural sector in Nigeria （pp.1-5）. In F. Okunmadewa （Ed.）， Poverty reduction and the Nigeria agricultural sector. Ibadan： Elshaddar Globial Ventures Ltd..
Olawepo， R. A. （2004）. Spatio-economic impact of community banks in participatory development： An example from Kwara State， Nigeria. Geo-Studies Forum， 2（1）， 40-51.
Pallant， J. （2010）. SPSS Survival Manual， A step by step guide to data analysis using SPSS for Windows （3rd ed.）. McGraw Hill.
Petrick， M. （2004）. A microeconometric analysis of credit rationing in the polish farm sector. Eur. Rev. Agric. Econ. 31， 23-47.
Pitt， M.， & Khandker， R. S. （1998）. The impact of group based credit programmes on poor household in Bangladesh. Journal of Political Economy， 106 （5）， 958-998.
Rahji， M. A. Y.， & Adeoti， A. I. （2010）. Determinants of agricultural credit rationing by commercial banks in southwestern， Nigeria. Inter. Res. J. Fin. and Econ.
Terluin， I. J. （2003）. Differences in economic development in rural regions of advanced countries： An overview and critical analysis of theories. Journal of Rural Studies， 19（3）， 327-344.