Journal of Food, Agriculture and Environment

The use of agricultural loan: An analysis of farmers’ bank selection decisions in Manisa, Turkey

Author(s):

Osman Murat Kocturk *, Mustafa Tepeci, Selim Duramaz, Ayhan Yatbaz

Recieved Date: 2013-07-12, Accepted Date: 2013-10-19

Abstract:

Agricultural sector is developing in Turkey, and the funding of farmers is mostly actualised by external resources such as loans. Since the establishment of the Republic of Turkey, Ziraat Bank (a state-owned bank) has offered financing to farmers, but today private banks are also financing the farmers and providing loans to them. The purpose of this study was (1) to investigate the bank (private versus public) selection factors that influence farmers’ decisions on agricultural loan uses, (2) to explore whether farmers value domestic capital banks over foreign capital banks, and (3) to designate the significance of Islamic banking practices for farmers. A survey was conducted on 103 farmers by visiting farms and cooperatives in Manisa. In addition to demographic variables, the survey instrument included 28 items followed by a one-to-five Likert type scale intended to reveal bank selection factors. These factors were reliability, service quality, loan conditions, loan costs, accessibility and individual credibility. The analyses indicated that reliability and accessibility of the banks influenced farmers’ bank selections. Farmers who preferred private sector banks for agricultural loan uses perceived higher levels of reliability and accessibility than did farmers who preferred public banks. Farmers perceived higher levels of reliability, service quality, positive loan conditions and lower loan costs for domestic capital banks than they did for foreign capital banks. Farmers who did not value Islamic banking practices perceived lower levels of service quality and reliability with Islamic banking. The study findings suggest that banks should invest more on reliability and accessibility factors to attract and retain their customers. Foreign capital banks could lower their loan costs and improve loan conditions, reliability and service quality to convince farmers to use their banking services. Islamic banks should improve their service quality and increase their reliability on the customers’ side.

Keywords:

Agriculture, banks, bank selection, agricultural loan, farmers, Turkey

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Journal: Journal of Food, Agriculture and Environment
Year: 2013
Volume: 11
Issue: 3&4
Category: Agriculture
Pages: 764-768

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