Determinants of coffee farmers cooperatives' demand for institutional credit: empirical evidence from Ethiopia

Abstract

This study explored determinants of coffee farmer cooperatives' demand for institutional credit under the Ethiopian context. The data was collected from 100 farmers primary cooperatives and analysed using descriptive statistics and Heckman two-step selection econometric model. The study reveals that the vast majority of the study cooperatives have potential demand for credit, while the revealed demand was found to be relatively low. Different sets of variables were found to influence cooperatives' potential and actual demand for institutional credit in different ways. In order to address constraints preventing farmer cooperatives from effectively demanding and accessing institutional credit, recommendations are made in relation to the borrower cooperatives, lending banks and government policy.