FACTORS INFLUENCING THE DECISION TO PARTICIPATE IN MICRO-CREDIT PROGRAMMES: AN ILLUSTRATION FOR NORTHERN GHANA

Abstract

In recent times, governments of several developing countries have been promoting micro-credit as a means for increasing investment in the livelihood activities of the poor and capital-constrained so as to raise their levels of income. This is premised on the assumption that poor people living mainly in rural areas will participate in micro-credit schemes once they are provided the opportunity. However, studies find that, in several instances, rural households refuse to borrow. This study uses the logit model to assess factors influencing the decision to participate in micro-credit schemes in Northern Ghana. The study revealed that age, value of farm output, non-farm income, number of micro-credit institutions, level of education and distance of micro-credit institutions from borrowing households influence individuals' decision to participate in micro-credit schemes. The study concludes that households will join credit programmes if there is the potential to increase gains from their farm enterprises.