Abstract:
Microcredit is one of the empowerment tools that have the potential to the agriculture
sector and change the life of farmers from a situation of abject poverty to a more dignified
life. At present, farmers face many problems when borrowing microcredit loans and there
are many factors that affecting on the demand for microcredit. Kurunegala district
accounts for the highest microcredit loan demand and agricultural loans borrowed from
other loan schemes in the last three years. Finding what factors affecting on the
microcredit demand in the agriculture sector in Kurunegala district seems important and
this research design to understand the drives of microcredit demand for the agriculture
sector. Accordingly, the objective of this study was to ascertain the determinants of the
demand for microcredit in Kurunegala district from the perspective of microcredit
consumers. A total of 100 microcredit consumers were selected from the Kurunegala
district using convenience sampling technique. The primary data analysis was done using
SPSS software. Simple regression with dummy variables was applied to determine the
influence of the demographic factors. The results of the study indicated that the
respondents mostly subscribe to agricultural credit products and then credit products that
focused on developing agriculture activities. The results further illustrated that income
level of microcredit holders, financial literacy and information availability had a
significant influence on the microcredit demand of the consumer. Gender and
employment status were non-significant to the microcredit demand. Financial literacy and
information availability were positively correlated with the microcredit demand. Findings
suggested to educate the farmers on loan acquisition process and to implement privatepublic integrated policy in Kurunegala district to effectively handle the agricultural loans.
Keywords: Agriculture loans, Financial literacy, Credit worthiness, Credit awareness
microcredit demand
