COMPLICACIONES MICROVASCULARES DIABETES MELLITUS TIPO2

Assefa et al. (2005), the Derg regime reorganized the financial sector in a manner that reflects its declared communist ideology and its economic thinking as stated in the Declaration on economic policy of socialist Ethiopia. The result was marginalization of the private sector, forcing to depend on self-financing and informal credit. The share in domestic credit outstanding during 1986-90 of the private sector and cooperatives averaged 4.7 and 1.1 per cents, respectively. More than 89 per cent of AIDB agricultural loans went to state farms while the rest went to agricultural cooperatives, with the private peasant sector receiving negligible share. Moreover, NGO credit schemes generally disregarded domestic savings mobilization, mainly depending on donor funds

Samson (2002), the reasons in which the households failed to get benefit from credit are due to miss-utilization of credit (17.5%), natural disasters (32.7 %), market problems (23.9%) and low output or profit gained from the business (21.8%) where as the other 4.1 percent are due to various reasons.

Zemen (2005), there are four important factors which affect the borrowers’ timely repayment of their debts in the region. These are the size of cultivated land, loan diversion behavior, membership condition and amount of other credit borrowed

G/hiwote (2006) has preformed his research using logit regression model and showed that five variables were significant to affect borrowers’ loan repayment performance. These variables include: educational status of the sample household, family size of the household, duration of cooperative membership of the household, total size and use of land holding of the household and amount of money borrowed by the household. Except

the size of land holding, all the significant explanatory variables affect the loan repayment performance smallholders positively.

Bekele (2001), has summarized his findings that are obtained using logit model as follows. The results showed that individuals who took larger loan had better repayment performance than those who took smaller loans. He argues that this result indicates that individual’s loan application were carefully evaluated, sized and approved by the local lenders. Thus, local screening groups should be strengthened and encouraged to set a uniform minimum standard for screening loan applications. Group lending is also another way of acquiring information on credit worthiness that is critical in reducing default risks.

Tefera (2004) has performed his research using Tobit model and he stated that, repayment rates of informal credit were found to be far superior to those of the formal credit. Higher repayment performance in non-formal credit could be associated with the application of social pressure, flexible repayment plan and timely availability of credit in right amount. The potential threat of the borrower’s reputation with in the village or community in the event of default is by itself an adequate deterrent against default.

Ambes (2003), the coefficients of elasticity relating to area cultivated, number of draft oxen, agricultural credit, contact of DA and total livestock holding were highly significant at one per cent level, thus indicating that one per cent increase in each over the mean level use would increase gross farm income of the farmers by 0.554 percent, 0.421 percent, 0.039 percent, 0.237 percent and 0.386 per cent, respectively. The coefficient for family labors was significant at 10 per cent but negative. This was, probably due to excess availability and usage of labors by small farmers.

Hailesselasse (2008), six variables were significant to affect borrowers’ loan repayment performance. These variables include: educational status of the sample household, credit experience of the household head, appropriateness of the repayment period, livestock income of the household, off-farm and non-farm income of the households and amount of input credit borrowed by the household. Except the suggestion of respondents for the

appropriateness of repayment period, all the significant explanatory Variables affect the loan repayment performance smallholders positively.

2.6.1Credit utilization

Agricultural credit enhances productivity and promotes standard of living by breaking vicious cycle of poverty of small scale farmers. Adegeye and Ditto (1985), described agricultural credit as the process of obtaining control over the use of money, goods and services in the present in exchange for a promise to repay at a future date. The crucial role of credit in agricultural production and development can also be appraised from the perspective of the quantity of problems emanating from the lack of it. In modern farming

business in Nigeria, provision of agricultural credit is not enough but efficient use of

such credit has become an important factor in order to increase productivity. Ogunfowora et al. (1972) reported that credit is not only needed for farming purposes, but also for family and consumption expenses; especially during the off season period. Credit has also been discovered to be a major constraint on the intensification of both large and small scale Farming (Von-Prisckieke 1986). The absence of rural banks or their unwillingness to meet credit need of rural farmers largely account for the wide influence of informal lending institutions on agricultural production in the rural areas. Abe (1982) reported that non-institutional creditors accounts for 70% of the total credits received by Nigerian farming population. However, with the present situation in Nigeria, these sources could hardly meet the increasing demand for credit by farmers.

Samson (2002), agricultural credit input, therefore, is a must for poor farmers to utilize agricultural input at proper amount.. Improving farmers’ access to adequate credit accelerates the uptake of advanced technologies. Though in most cases it is difficult to single out quantitatively the benefits gained as the result of credit utilization, the survey has attempted to get the perception of the rural households towards the benefit of credit utilization. This is due to the fact that the households change or progress is brought by so many factors jointly. As the survey result clearly indicated that about 80.5 percent of the respondents replied that they have been enjoyed the benefit of credit

Therefore, for the successful utilization of borrowed money and timely repayment of the credit, lenders are also expected to train the borrowers about the proper utilization of agricultural credit. Since the system of agricultural credit is similar throughout the country, many authors have studied credit utilization and loan repayment performance of smallholders using Multiple Linear Discriminates Analysis or logistic model. Their finding is more or less the same