ABSTRACT

The need for credit and savings facilities in developing countries like Cameroon is on the increase. This is because credit is used to enhance production and business while savings is acknowledged as a powerful tool for poverty reduction. This study 'p therefore examined rural credit market performance and savings mobilization in the North West Province of Cameroon. It examined the various participants in the credit markets and savings institutions. It also estimated the credit demand and supply functions as well as the loan repayment in both the formal and informal credit markets. It also examined factors that discriminate between users of formal and informal credit sources. Primary data collected from purposely selected samples of 325 rural dwellers and 64 rural lenders were used for the study. Descriptive statistic (percentages, frequency), multiple regression analysis and discriminant analysis were used for data analysis. Results show that the determinants of credit demand in the formal market were interest rate, income of respondent, size of household, farm size and distance to source of loan with an R2of .843. For the informal market, the determinants of credit demand were age of respondent, educational level of respondent, farm size, interest rate and income with an R2of .845. None price determinant of credit supply were gross income interest, source of loan and experience. Sex of respondent, distance to saving institution, interest rate and household size and income were statistically significant in influencing savings in  formal institutions. On the other hand, household size, income and interest rate were significant in determining savings in informal institutions. Statistically significant determinants of loan repayment in formal institutions were amount borrowed, loan monitoring and interest rates while in informal institutions they were amount borrowed, educational level, interest rate, household size and sex. Variables that have significant influence on savings mobilization were minimum amount required to open account, interest payment, value of asset and type of institution. Further results showed that there was a significant difference in credit demand, savings and loan repayment for formal and informal institutions. Also the results showed that the amount of credit, educational level, years of experience and distance to source were factors discriminating between users of formal and users of informal credit institutions. The mean annual savings for formal users was 188,O57CFA and 193,958CFA for informal users. Problems facing rural credit markets include high collateral demand, lack of guarantors and high interest rates. In comparative terms, informal institutions covered 1.84 percent of the population while formal institutions cover 1.4 percent. Therefore based on these results, appropriate policies that could strengthen rural people's participation in rural credit and savings markets were recommended.