Farm Household Access to Agricultural Credit in Sagnarigu Municipal of Northern Ghana: Application of Cragg’s Double Hurdle Model

Abstract

Agricultural credit plays a crucial role in enabling smallholder farmers to increase farm output and reduce rural poverty. Despite this, access to credit remains a challenge to many smallholders. This study thus used cross-sectional data and Cragg’s double-hurdle model to assess the factors affecting farm credit access and the determinants of loan size in the Sagnarigu municipal of northern Ghana. The study found that institutional factors played a significant role in the amounts borrowed. Furthermore, household characteristics had little influence on credit access, whereas farm characteristics played a major role in credit accessibility and loan size. These factors should be considered in designing credit policies for smallholder farmers.