This study was conducted in the south region of Punjab province of Pakistan. Four districts were purposely selected to examine the determinants which critically instigate the demand for borrowing micro finances in agriculture farming. The research also attempted to analyze those socio-economic factors which established constraints for acquiring loan from micro finance institutions (MFIs). Research design for this study was primary study along with filed observations. A multistage sampling technique was applied to collect primary data from selected districts through structured questionnaires after pre-testing and seeking the expert opinions of MFIs officials. Tobit regression model and multiple regression models were applied to estimate the impact of socioeconomic variables on the microfinance accessibility and constraint level. The descriptive statistics of respondents along with frequency and percentages distribution was also carried out. The results illustrated that five determinants; gender, age, education, farm size and dependency ratio had significant influence on the demand of microfinance. Farm experience and primary occupation were non-significant. Income level of farmers was negatively correlated with the demand of microfinance. The study proved that three constraints; far-away distance of MFIs, complex lending procedure and high interest rates were top in the constraint list. The results of multiple regression model explained that education level, land ownership and preferences of farmers for informal finances have negative relationship and reduces the constraints to access microfinance. The findings also revealed that for efficient allocation of resources, MFIs preferred to disburse loan towards educated and young age farmers as they are more inclined to use latest farm production technologies. The study concluded that farmer base organizations (FBOs) should be registered with district agriculture extension office to educate the farmers on loan acquisition process, record keeping and to encourage the saving habit. A public- private co-integrated policy is needed to implement in south region of Punjab province to effectively handle the rural financial constraints
Keywords: Agriculture Microfinance, Demand Constraints, Determinants, Farm Production, Punjab., Tobit Regression
