Assessment of creditworthiness and repayment among bank of agriculture loan beneficiaries in Cross River State, Nigeria

Abstract

Due to the high rate of defaults amongst loan beneficiaries in Nigeria and Cross River State in particular,
this study examined creditworthiness and loan repayment of poultry farmers in Cross River State.
Specifically, the study assessed credit worthiness of borrowers, identified factors that discriminate
between credit worthy and non credit worthy farmers and analyzed factors that influence the farmers'
ability to loan repayment. A total of 120 poultry farmers were used in the study. Data were collected by
questionnaire and analyzed by means, frequencies, percentages, discriminant analysis and multiple
regression techniques. The results revealed that 51.7% of the respondents were credit worthy. Also,
Farmers with better educational level and large farm sizes were non credit worthy. While farmers with large
total operating expenditure-income ratio, longer years of farming, older farmers with adequate supervision
were credit worthy. The results of the linear regression model showed that farmers with large Loan
amounts, better educational level, larger farm income, late disbursement and large farm sizes repaid their
loans more. An increase in these variables increased their repayment ability. While farmers who were
defaulting in their loan repayments were supervised more than those who were not defaulting. The study
recommended that older and experienced farmers should be taken in to consideration when loan
applications are made.