Determinants of access to credit by women retail traders in the Mfantseman Municipality of the Central Region

Abstract

The underlying objective of this study was to analyse the determinants of access to credit by women retail traders in the Mfantseman Municipality of the Central Region. The main aim was to provide a better understanding of the individual’s socio-economic characteristics and institutional factors, not only because they influence the individual’s access to credit but also due to the fact that potential lenders are likely to base their assessment of borrower’s creditworthiness on such characteristics and factors. Data for the study was obtained through a survey using an interview schedule designed to elicit information on variables of interest specified in the empirical model. In all, 196 respondents were selected randomly from the study area. The analysis was conducted using descriptive analysis and logit regression. The empirical estimation of the logit regression model revealed that junior and senior high school education, interest rate, collateral requirement, length of affiliation with financial institution and savings account significantly influence access to credit. The study suggests that the least “exit point” for female education in the Mfanteman Municipality must be senior high school level. Financial institutions must find innovative ways to minimise default rate in loan repayment in order to bring interest rate down, make strict book-keeping or financial records mandatory for retail traders as collateral substitutes. Women retail traders should build healthy interpersonal relationships with credit officers as a way of building social capital for loan acquisition. Finally, women retail traders should embrace the habit of saving