An assessment of financial literacy and its influence on rural agricultural loan uptake: a case study of Guaranty Trust Bank
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Background of the Study
Financial literacy is a critical determinant of successful engagement with formal financial services, especially in rural areas where many farmers have traditionally been excluded from modern banking systems. Guaranty Trust Bank (GTBank) has implemented comprehensive financial literacy programs to educate rural farmers on budgeting, savings, investment, and the responsible use of credit. These initiatives are designed to empower farmers by enhancing their ability to make informed financial decisions and manage agricultural loans effectively (Adekunle, 2023).
The bank’s financial literacy programs include workshops, on-site training sessions, and digital learning modules tailored to the specific needs of rural communities. By improving financial knowledge, GTBank aims to increase loan uptake, reduce default rates, and ultimately support sustainable agricultural development. Increased financial literacy has been shown to correlate with improved repayment behavior and higher levels of financial inclusion, as informed borrowers are better equipped to manage risks and seize growth opportunities (Olatunji, 2024).
Moreover, these educational initiatives help demystify the loan application process and foster trust between the bank and rural clientele, which is crucial in overcoming historical skepticism toward formal financial institutions. GTBank’s approach, which integrates continuous support and follow-up, ensures that the benefits of financial education are sustained over time (Ibrahim, 2025). Despite these advances, challenges remain due to varying levels of baseline education, cultural barriers, and the need for ongoing reinforcement of financial concepts. This study seeks to assess the influence of financial literacy on rural agricultural loan uptake at GTBank, aiming to identify key factors that can enhance the effectiveness of these programs.
Statement of the Problem
Although financial literacy is essential for increasing agricultural loan uptake, many rural farmers continue to exhibit low levels of financial knowledge, which adversely affects their ability to access and manage loans (Adekunle, 2023). Guaranty Trust Bank’s financial literacy initiatives have been implemented to bridge this gap; however, challenges such as limited educational backgrounds, language barriers, and cultural resistance persist. As a result, some farmers fail to fully benefit from these programs, leading to suboptimal loan uptake and higher default rates (Olatunji, 2024).
Furthermore, the lack of continuous follow-up and reinforcement of financial concepts often results in the erosion of initial training gains, reducing the long-term impact of these educational interventions. External factors, including economic volatility and unpredictable weather conditions, further exacerbate the difficulties faced by rural farmers in managing credit effectively (Ibrahim, 2025). These issues underscore the need for a comprehensive evaluation of how financial literacy influences loan uptake and repayment performance. This study aims to identify the key barriers that hinder the effectiveness of financial literacy programs and to propose strategies for enhancing their impact, ensuring that increased financial knowledge translates into improved agricultural loan performance.
Objectives of the Study
• To assess the impact of financial literacy on agricultural loan uptake among rural farmers.
• To identify the challenges hindering effective financial education in rural areas.
• To recommend strategies for enhancing financial literacy programs to improve loan performance.
Research Questions
• How does financial literacy influence the uptake and management of agricultural loans?
• What are the primary barriers to effective financial education among rural farmers?
• How can GTBank improve its financial literacy programs to better serve rural communities?
Research Hypotheses
• H1: Increased financial literacy significantly improves agricultural loan uptake among rural farmers.
• H2: Barriers such as low educational attainment and cultural resistance negatively impact financial literacy outcomes.
• H3: Continuous support and tailored educational interventions enhance the long-term benefits of financial literacy programs.
Scope and Limitations of the Study
This study focuses on the impact of financial literacy on agricultural loan uptake among rural farmers served by GTBank. Data are obtained from training records, borrower surveys, and field interviews. Limitations include regional disparities and potential self-reporting biases.
Definitions of Terms
• Financial Literacy: The ability to understand and effectively use financial information and services.
• Agricultural Loan Uptake: The rate at which rural farmers apply for and receive loans.
• Financial Inclusion: The process of ensuring that all individuals have access to affordable and appropriate financial services.
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