Determinant of credit access and demand in Tigray region, Ethiopia

In this paper, the researchers investigated the determinants that affect access to and demand for credit in Tigray, Ethiopia. A cross sectional panel data collected in 2003 and 2010 were used in the analysis. A bivariate probit model was employed on cross sectional data of 2010, which had 519 households, to examine factors that determine access to and demand for credit. Access to and demand for credit was mostly explained by family size, livestock endowment, value of assets, farm size, and religion and off-farm income. A panel data for the years 2003 and 2010, with 694 observations, was used to assess whether fertilizer adoption stimulates (crowds in) or reduces (crowds out) manure application in the presence of credit. Logit models were run with dependent variables being amount demanded of credit and fertilizer use intensity. An error term from the credit demand model was included as explanatory in the fertilizer use logit model to cater for selection bias. Consequently the error term from the fertilizer use logit model was included in the probit model (with control function approach) for the manure adoption. A positive correlation between fertilizer and manure adoption was found and this seemed to point in the direction that these two inputs are complements.M-Ø