| Abstract: | This study tried to identify the effect of demographic, socio-economic, and institutional factors on access to formal credit in Debrebrhan Zuria Woreda. To achieve this objective, the study utilized a cross-sectional survey research design. Primary data was collected using a self-designed questionnaire from 360 Debrebrhan Zuria woreda household farmers who were selected by multi-stage sampling. A binary Logistic regression model was used to analyze the mixed data using SPSS version 20. In addition, the interview was conducted with selected ACSI officers to support the data collected by questionnaire. The result of the study revealed that 48 % of the respondents in the study area had access to formal credit while 53 % of the respondents did not have the access to formal credit. It also found that variables like a collateral requirement, saving culture of households, source of information, number of livestock units, experience in credit use, and deposit interest rate were important in influencing access to formal credit use as evidenced by the model output. Hence, the researcher suggests that CBE and microfinance institutions should encourage farmers saving culture by strengthening deposit interest rates. MFWARE should promote themselves and the type of services they will provide over different local media and mass media such as radio, television,n, and newspapers so, that the rural poor will had an improved farmer’s access to evidence. In the case of collateral, the researcher recommended that the household heads or the respondents form a group to collect loans or credit from banks and microfinance. In case of a source of information, iwasre available that Small landholder farmers need to find new information about not only financial institutions but also everything related to their country. |
