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Rheinischen Friedrich-Wilhelms-Universität Bonn (2010)

The extent of farm credit in the Lybian agricultural sector

Ahmed Abdeljalil

Titre : The extent of farm credit in the Lybian agricultural sector

Auteur : Ahmed Abdeljalil

Université de soutenance : Rheinischen Friedrich-Wilhelms-Universität Bonn

Grade : Doctoral Thesis 2010

Rural households in Libya are credit constrained. In terms of access and amount of credits received, formal banks are the main players in credit market. Despite 44 branches of agricultural banks, distributed in the whole country, these branches offer a limited number of credits for different purposes every year, the shares of these branches in rural credit market are quite small, agricultural banks provide only 24% of loans and the other 76% of loans are provided by other banks, mainly commercial banks. However, agricultural credits provided by agricultural banks offer most favorable terms for those households that have a positive demand on agricultural credits. Households that have no access to agricultural credits on the other hand will face a higher interest rate when applying for credits from non-agricultural banks. This study is going to investigate on how important and large credits in Libyan rural-areas, and who is the main player in the rural-credit market. Therefore in this study factors affecting of access to and applications for credit are determined in three different locations. In addition the affect of households and land, regional socio-economic characteristics is being analyzed, using econometric analysis based on primary data collected during field research in years the 2006 and 2007. Empirical results using recent data collected from three different regions in Libya, confirm that more than the half of rural households have no access to credits, and around 42% of rural households do not want to participate or take loans from any financial institution charging interest rates due to the religious consideration prohibit interest rates charged by banks. The results clearly indicate that more 51.85% of the loans taken by households are used to build houses, 33.3% of the loans are used in production inputs, and 9.8%, 4.9% of loans are used for family needs and social events respectively. Findings indicate that socio-economic characteristics’ of head of households are important factors increasing the probability of access to credit. Households headed by married men have a higher probability of access to credit compared to households headed by females or solidarity persons. Head of household with some years in schooling and a permanent monthly income from off-farm activity have a higher probability of access to credits than other households without income or education. Different forms of credit constraints are also discussed and comparisons between selected samples down in order to classify constrained and unconstrained households.


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