Impact of Financial Literacy On Agricultural Credit Accessibility Among Farmers in Punjab, Pakistan

Abstract

Agriculture plays a crucial role in global economic stability, food security, and poverty alleviation, especially in developing countries. In Pakistan, the sector contributes significantly to GDP and employment, with Punjab serving as the leading agricultural province, often termed the nation's “breadbasket.” Despite its importance, smallholder farmers in Punjab face persistent barriers to accessing formal credit, primarily due to limited financial awareness, lack of collateral, and mistrust in financial institutions. This study investigates the impact of financial literacy on agricultural credit accessibility among smallholder farmers in rural Punjab. Primary data were collected from 140 respondents across Multan, Gujranwala, and Faisalabad using a structured questionnaire and stratified random sampling. Data analysis was conducted using descriptive statistics, cross-tabulation, and binary logistic regression in SPSS. Findings indicate that financial literacy and education are strong, statistically significant predictors of formal credit access, while age shows a negative correlation. Other variables, including land ownership, farming experience, and access to digital devices, were not significant in the regression model. Chi-square tests further confirmed significant associations between education, financial knowledge, and credit uptake. The study underscores the importance of integrating financial education into rural development programs to improve credit utilization and promote sustainable agricultural growth in Punjab.