Access, Utilization Pattern and Impact of Agricultural Credit on Farm Income: Evidence From Vegetable Farmers in Thakre Rural Municipality, Nepal

Abstract

This study assesses farmers' access to credit, their utilization patterns, and the impact on farm income. Data were collected in 2024 by interviewing 150 randomly selected farmers from Thakre rural municipality of Dhading and analyzed using descriptive statistics, an independent samples t-test, and a weighted priority index. About 67% of sampled households accessed credits, of which only 47% used the funds exclusively for agricultural activities. Of the 67% who borrowed, 44% accessed formal credit sources, implying that the remaining 56% relied entirely on informal channels. The independent t-test shows that credit receivers have a significantly higher annual farm income (NRs. 536,231/HH) than that of non-receivers (NRs. 372,071/HH) at a highly significant level (p = 0.0001). Easier access to formal credit will substitute costly informal credit to enhance farm productivity and income. Therefore, implementing effective regulatory frameworks and strict monitoring is crucial to remove structural and procedural barriers, thereby enhancing proper credit access and utilization.