REVIEW ARTICLE DETERMINANTS OF RURAL YOUTH TO ACCESS FORMAL CREDIT AND THEIR PERCEPTION TOWARDS CREDIT PROVISION IN ETHIOPIA

Abstract

Microcredit becomes so important tool in recent years that has a great role in the fight against poverty. It has been adopted as one of the sustainable development strategies at the international level. The provision of credit can help the youth to make own economic decisions and escape from poverty by engaging in income generation activities. This study was aimed to review youth perception, constraints of credit use and determinants of credit use among youth in Ethiopia. The review was based on reviewing secondary data from journal articles, books, published and unpublished reports of national and international organizations based on their relevance to the topic. According to many literatures, variables such as sex, perception of the application procedure for loan, prior saving requirement, loan size and distance from the lending institution were more likely to negatively influence formal credit access by rural youth. Therefore, the government and other policy makers need to enhance enrolment of formal education, appreciation of saving habit, expansion of road, improving of financial infrastructures, provision of awareness creation training towards the benefit of credit, and improving of lending system in order to improving youth livelihoods.