Factors Affecting Demand for Credit in Uganda

ABSTRACT This study was based on Uganda National Household Survey (UNHS) 2005/6 data set collected by the Uganda Bureau of Statistics. Relevant data sets were extracted and merged in stata. The underlying objective is to analyse the factors that affect household demand for credit. The aim is provide an in depth understanding of the individual, household and locational characteristics, not only because they affect demand for credit but also due to the fact that the potential lenders are likely to base their assessment of credit worthiness on such characteristics. The study covered the whole country covering 7426 households. Factors considered important in determining demand for credit were considered, these included individual characteristics, household characteristics and location characteristics. Analysis was carried out at three levels i. .e univariate, bivariate and multivariate. At univariate level frequencies and percentages were generated and presented in table form. At bivariate level cross tables were generated between individual factor (independent) and the dependent variable. At multivariate level, a logit model was fitted without considering the results of the bivariate level. All characteristics were found to be statistically significant with exception of household income and household size. The recommendations made include further research in Education Level and household income how they affect demand for credit, government, non government organisations, development partners and private sector to deliberately design credit conditions for women, and also addressing the regional imbalances that exists.

TABLE OF CONTENTS

DECLARATION A

DECLARATION B ii

APPROVAL SHEET Ill

DEDICATION liv

ACKNOWLEDGEMENT V

TABLE OF CONTENTS vi

ABSTRACT lix

ABBREVIATIONS AND ACRONYMS x

CHAPTER ONE 1

INTRODUCTION 1

1.0 BAcKGRoUND 1

1.1 STATEMENT OFTHE PROBLEM 3

1.2 PURPosES 5

1.3 OBJECrIvEs 5

1.4 HYPoTHEsIs 6

1.5 ScoPE 6

1.6 SIGNIFIcANcE~ 7

1.7 CoNCEPTUAL FRAME WORK 7

CHAPTER TWO 9

REVIEW OF RELATED LITERATURE 9

CHAPTER THREE 20

METHODOLOGY ...................................~.20

3.0 INTRODUCTION 20

3.1 DATA SOURCES 20

3.2 SAMPLE DESIGN 20

3.3 SAMPLE SIZE 21

3.4 MODEL SPECIFICATION 21

3.5 VARIABLEs 23

3.6 DATA PROCESSING 24

CHAPTER FOUR 25

FINDINGS OF THE STUDY 25

4.0 INTRODUCTION 25

4.1 UNIvARIATE ANALYSIS 25

4.1.1 Education Level and demand for credit 25

4.2.2 House hold income and demand for Credit 25

4.1.3 Gender and demand for Credit 26

4.1.4 Age and demand for Credit 26

4.1.5 Marital status and demand for Credit 27

4.1.6 HOUSE HOLD SIZE AND DEMAND FOR CREDif 28

4.1.7 Household Assets and demand for Credit 28

4.1.8 Region and demand for Credit 29

4.2 BIvARIATE ANALYSIS 30

4.2.1 Level of Education and demand for Credit 30

4.2.3 Gender and demand for Credit 32

‘Iii

4.2.4 Age and demand for Credit 32

4.2.5 Marital Status and demand for Credit 34

4.2.6 HOUSE HOLD SIZE AND DEMAND FOR CREDrr 35

4.2.7 HOUSEHOLD ASSETS AND DEMAND FOR CREDIT 36

4.3.8 REGION AND DEMAND FOR CREDrI 36

4.4 MuLTIvARIATE ANALYSIS 38

4.4.1 Introduction 38

4.4.2 Education level and demand for Credit 39

4.4.3 Gender and demand for Credit 39

4.4.4 Age and demand for Credit 40

4.4.5 Marital Status and demand for Credit 40

4.4.6 HoUSEHoLD SIZE AND DEMAND FOR CREDrI 41

4,4.7: Household asset and demand for Credit 41

CHAPTER FIVE’ 43

SUMMARY, CONCLUSIONS AND RECOMMEDATIONS 43

5.0 Introduction 43

5.1 Summary 43

5.2 Conclusions 43

5.3 Recommendations 44

REFERENCES 46

APPENDICES’ 47