Use of agent banking services and its effect on agricultural performance among small scale farmers in Nyandarua County
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Abstract

In Kenya, financial inclusion has become key in development policy with the belief that access to financial services is a powerful means of reducing poverty. About 32% of the population is excluded from access to financial services with the situation being worse in the rural areas. With the introduction of mobile phone based money transfer services and agent banking models of financial intermediation, there is now a wider choice from the financial provision modes (FPM) that existed before. Agent banking model is an ICT enabled model where formal banks provide financial services through non-bank agents, such as grocery stores, retail outlets, post offices, pharmacies, or lottery outlets. It allows banks to expand services into areas where they do not have sufficient incentive or capacity to establish a formal branch, which is particularly true in rural and poor areas. Access to financial services has been argued to raise both technical and allocative efficiency in agricultural sector since farmers can adopt more capital-intensive methods of production in addition to allowing farmers to substitute non-market inputs with market inputs therefore increasing a farmer’s ability to bear risk. This study examined use of agent banking and its effect on agricultural performance of small scale farmers. The analysis was done using different regression models.