The Impact of Psychological Factors on Productivity of Agricultural Financing: An Evidence from Punjab, Pakistan

Abstract

The purpose of this study was to estimate the impact of psychological factors of farmers on the productivity of agricultural finance used for agriculture purposes. The independent variables include the socio-economic and psychological factors of the farmers. The psychological factors used in the study are trust, impulsiveness, perceived control, agreeableness, extraversion, organizational commitment, and risk aversion characteristics of the farmers. For this study, the primary data were collected through the questionnaire from 400 farmers from district Multan, Punjab.  A binary logit model was used for the analysis. According to the estimated results, the impact of the age of a farmer is negative and significant on the productivity of agriculture financing. There is a positive and significant impact of agricultural land on the productivity of agricultural finance. There is a positive and significant impact of the income level of the farmer on the productivity of the agricultural loan. The farmer’s personality characteristic of having trust in others for the very first time has a positive and significant impact on the productivity of agricultural finance. Lack of perceived control in a farmer’s personality has a negative and significant impact on agricultural productivity while using agricultural finance for the productive purpose at the farm. The impact of agreeableness behavior has negative but significant. Extraversion characteristic has a positive and significant impact on the productivity of the farmers.