FACTORS INFLUENCING LEVEL OF PARTICIPATION IN THE INFORMAL FINANCIAL MARKET AMONG FARM HOUSEHOLDS IN ABIA STATE, NIGERIA FACTORS INFLUENCING LEVEL OF PARTICIPATION IN THE INFORMAL FINANCIAL MARKET AMONG FARM HOUSEHOLDS IN ABIA STATE, NIGERIA

Abstract

The study evaluated factors influencing the level of informal financial market participation among farm households in Abia State, Nigeria. A multistage random sampling technique was used to sample 150 farm household heads. Primary data were collected with the use of a well-structured questionnaire with the aid of enumerators. The data collected were analyzed using descriptive and inferential statistics such as frequency, means, and Tobit type 2 regression model. Among farm households, the major sources of Informal financial market were ROSCAs/ASCRA/thrift (88.79%), family and friends (76.68%), and money lenders (43.05%). he result of the Tobit regression analysis showed that marital status (p<0.05), household size (p<0.01), and interest rate (p<0.01) were significant and negatively affect the level of participation, while gender (p<0.05), farm size (p<0.01), income (p<0.01), and guarantor (p<0.05) were significant and positively related to the level of participation. Based on the results, the level of farmers’ participation in the informal financial market should be encouraged through farmers’ associations. This will help in the involvement of borrowers in both operational and policy decisions which constitute strong participatory elements in the management of credit and also, help to unleash the inherent social capital and information advantages for improved informal financing. It was also recommended that farmers’ associations organize training about savings mobilization as a kind of credit scheme that can help in improving their level of accessibility to credit.