Effects of institutional and borrower characteristics on loan recovery: A study of Ondo State agricultural credit corporation.

Abstract

In this empirical study, the role of some selected institutional and borrower characteristics in relation to farm credit repayment was investigated. 135 borrowers representing 30.5% of the total number of individual borrowers from the Ondo State Agricultural credit Corporation in Nigeria were randomly selected and interviewed from 12 of the 17 Local Government Areas of the State. Data were subjected to descriptive statistics in addition to correlation and regression analyses. Findings indicate that most farmers were above average age, possessed low education and obtained small loan sizes. Loans issued cut across social and educational lines. Food crop loans were largest in number. About a third (30%) of the loans were mis-used despite average-level farn supervisory visits by credit agents. Loans were profitably utilized by 59.40% while only 39.85 % of borrowers fully repaid their loans. Only the level of loan profitability and size of loan spent on approved enterprises contributed significantly to predicting loan repayment.

Keywords: Predictive factors, loan recovery.