Abstract

This paper investigates the determinants of loan repayment default among farmers in Brong Ahafo region of Ghana. Data used in this study was gathered through a survey of 374 farmers in five districts within Brong Ahafo region of Ghana. The study employed Probit model to investigate factors that influence farmer’s loan repayment default. The results showed that farm size, and engagement in off-farm income generating activities reduces the likelihood of loan repayment default significantly. Also, larger loan amount and longer repayment period as well as access to training are more likely to reduce loan repayment default. Thus, any policy that aimed at improving farm sizes, farm income and cultivation of cash crops would significantly reduce loan repayment default. In addition, loan repayment default would reduce if lenders train their loan beneficiaries and offer them adequate amount of loan and longer repayment period.

Key words: Loan repayment default, farmers, Brong Ahafo region, Ghana, probit.