ISSN 2167-0439
International Journal of Management and Business Studies ISSN 2167-0439 Vol. 6 (2), pp. 221-232, February, 2016. © International Scholars Journals
Case Study
Assessment of loan size and repayment performance of oil palm borrowers in Abia State, Nigeria
C. Y. Ovigwe 1, Osaji G. Anthony*, and Dorye Andrew Bozienghen3
1Department of Agricultural Economics, Michael Okpara University of Agriculture, Umudike, Abia State, Nigeria.
2Department of Banking and Finance, Abia State University, Uturu, Abia State, Nigeria.
3Department of Economics, Caritas University Enugu, Enugu, Nigeria.
E-mail: [email protected]
Accepted 5 January, 2016
Abstract
This study was designed to investigate the loan size and repayment performance of smallholder oil palm producers and processors in Nigeria using Abia State as a case study. Ninety respondents, comprising 54 producers and 36 processors, were randomly selected and interviewed. Ordinary Least Square technique was used in analyzing the data and drawing conclusions. The analysis of data revealed that loan size by oil palm processors was significantly determined by processing experience, gross annual income and interest rate. For the farmer-borrowers, the major determinants of loan size were educational level and interest rate all of which fell in line with a priori expectations as indicated by the signs of the coefficients of relevant variables. On loan repayment rate and credit worthiness rating, results of data analysis showed that loan-asset ratio and distance between home and source of loan were significant determinants of loan repayment rate.
Key words: Loan size, oil palm producers, agriculture, credit rating, interest rate, OLS.