An Empirical Assessment of the Impact of Access to Credit on Farm Output: A Case Study of Sefwi-Wiawso Municipality Ghana

Abstract

The study examined the socio-demographic features of farmers and credit accessibility in the Sefwi-Wiawso Municipality Ghana. It also identifies the sources and factors influencing access to credit in the Sefwi-Wiawso Municipality. Primary data were obtained from 1,200 households and farmers within the Sefwi-Wiawso Municipal. The empirical analysis employed a logistic regression technique, the Tobit model and Endogenous Switching Regression Model (ESRM) to explore the accessibility of credit on productivity in the agriculture sector. The results revealed that age and gender are statistically significant in determining access to credit from both the logit and the endogenous regression models. The endogenous switching regression model further reveals that educational status, land ownership, access to knowledge on credit significantly influences the amount of credit received by a particular farmer within the Sefwi-Wiawso Municipality. These findings have practical implications for the modernizations of the Agriculture sector in Ghana. It is therefore important for various stakeholders to increase financial literacy among farming communities and the financial institutions to increase the credit accessibility by the Agriculture sector. It is therefore recommended that extension services provision, diversification of agriculture production and easy access to credit from financial institutions in the Municipality be established to ensure increased agriculture production.