Financial Literacy and Credit Accessibility of Rice Farmers in Pakistan: Analysis for Central Punjab and Khyber Pakhtunkhwa Regions

Abstract

This study investigates the factors that affect farmers’ access to Food Security and Agricultural Credit (FSAC) services for the farmers of Pakistan who have no access to banking but have a feasible farm business. Using multiple regressions and logistic analysis, the authors revealed the determinants of farmers’ financial literacy and analyzed the variables which affected the farmers’ accessibility to FSAC. Results indicated that the average financial literacy of respondents was at a moderate level. It was affected by the age of respondents, length of their education, distance to nearby cities, ownership of bank accounts, annual income, and financial education experience. The FSAC accessibility was also impacted by the area of cultivated land, interest rate, collateral, farms’ income, financial literacy index, credit accessibility experiences, the legal status of farmer groups, and the amount of a loan. Some of the issues that prevent farmers from having widespread access to the FSAC include the lack of loan need, lack of FSAC awareness, lack of collateral, loan usury perspective, loan rejection experience, fear of borrowing from the bank, and inactive farmer groups. The study contributes to the existing literature on the determinants of farmers’ access and choice of credit sources by using a primary data set.

Sustaining Performance of Wheat–Rice Farms in Pakistan: The Effects of Financial Literacy and Financial Inclusion

“…A close-ended structured questionnaire was used for data collection. In earlier studies in the region, Asdullah and Yazdifar [64], Anjum and Ming [65], Pathan et al [66], and Raza et al [45] demonstrated that it was easier for respondents to comprehend and reply to close-ended questions compared to open-ended ones. As the population under study comprises farmers, who have lower literacy and knowledge, it is better to select the easier questionnaire style.…”

“…Financial inclusion has several benefits, including access to credit, improved opportunities for savings, and improved financial literacy [26,44]. Financial inclusion also aids in poverty reduction and inequality and promotes economic growth [45]. Financial inclusion leads to the provision of increased access to financial services for individuals and communities that have been ignored in the past, leading to the creation of opportunities for poverty reduction.…”

Mediating Effect of Students Entrepreneurial Attitude in Relationship of Financial Literacy and Financial Behavior on Entrepreneurial Intention

“…Individuals' desire to become entrepreneurs can be influenced by various personal circumstances (Murugesan & Dominic, 2013). The majority of scholars held the opinion that saving and financial literacy have a direct or indirect impact on people's desire to start their own business and entrepreneurial intent (Hilgert et al, 2003;Li & Qian, 2020;Rikwentishe et al, 2015) A person's financial welfare and security depend heavily on their financial literacy (Raza et al, 2023). Numerous scholars have demonstrated that people with a high degree of financial literacy can readily acquire the skills required for risk management, recognize business possibilities, and learn about markets and finance to support the expansion of venture formation and entrepreneurship (Klapper et al, 2015;Li & Qian, 2020).…”

Do county financial marketization reforms promote food total factor productivity growth?: a mechanistic analysis of the factors quality of land, labor, and capital

“…The larger the collection of elements related to information acquisition, communication, and utilization, the more ways for farmers to collect information and acquire more financial knowledge. As financial literacy improves, farmers are likely to be more willing to obtain formal financial loans, and less likely to hide personal information due to conservatism, hence effectively mining farmer's credit information and reducing the information barriers between banks and farmers (Raza et al, 2023).…”