Elasticity of Credit Demand in Agriculture Sector in Pakistan

Abstract

Purpose: The purpose of this paper is to investigate fundamental factors that bring change in the demand of credit in agriculture sector of Pakistan. Furthermore it measures the effect of these factors on agriculture credit requirement.

Design/methodology/approach: Field research was conducted. The questionnaire was formed by an amalgamation of existing relevant literature. The main research target sample consisted of residential farmers in Pakistan. Reliability tests and statistical analyses were executed to verify both scale validity and reliability and answer the research questions.

Findings: Factors driven from the elasticity of credit demand in agriculture sector are climate change, interest rate, investment in micro irrigation system, and credit worthiness have shown least variation in the statistical results which shows that these variables have immense effect on the demand of credit in Agriculture sector.

Research limitations/implications Results may not generalize outside Pakistan or to other financial services.

Practical implications: The present study helps the Government and financial institutes to understand and find solution of those factors which cause decrease in agriculture credit demand. The study can also help in making policy which is related to financial matter in agriculture sector.

Originality/value: __This paper mainly reveals the consequence of financial and economical factors on elasticity of agriculture credit demand.

Keywords: Credit Demand, Agriculture Credit, elasticity