Farmers’ Satisfaction with Institutional Financing: Moderating and Mediating Effects

Farmer Interaction in Dapoli block of Ratnagiri district, Maharashtra

Government of India has been implementing a number of policies to strengthen the agriculture sector and improve the farmers’ economic conditions through its institutional financing framework. Despite these efforts, a high level of financial distress/ dissatisfaction can be seen among the farmers in Maharashtra. Hence, it is imperative to map the farmers’ financial struggles with their satisfaction toward credit services. In order to measure the farmers’ satisfaction with institutional finance, an empirical study was carried out with 185 farmers in the villages of Dapoli block of Ratnagiri district, Maharashtra. Structural Equation Modeling (SEM) was applied to measure the role of mediating and moderating variables on farmers’ satisfaction with current institutional financing in Maharashtra. Results show that access to financial service features, quality financial services and farm’s financial performance are effective in mediating farmers’ contentment , while ‘perceived value’ towards better financial services moderates farmers’ satisfaction towards institutional financing significantly. Hence, including these variables for assessing the performance of financial institutions across the farming community could be an appropriate policy recommendation.

Miss Megha Mhaskar, ARF lab member, IIT Kharagpur