Journal of Economics and Sustainable Development www.iiste.org ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online) Vol.7, No.4, 2016 68 Rural Households Banking and Financial Behaviours in Ekiti State, Nigeria Femi Michael Oluwatusin and Oluwatosin Olofinsao Agricultural Economics and Extension Department, Ekiti State University, Ado-Ekiti, Nigeria Abstract Rural households are faced with various banking methods, but they prefer the informal (unorganized) banking methods, where they source for finance to aid their farming activities and general family wellbeing. This necessitated the study of the financial and banking behaviours among rural households in Ekiti State. One hundred and twenty respondents were randomly selected in the study area. Descriptive statistics was used to ascertain the socio-economic characteristics of rural households while probit regression was used to analyse the relationship between the socio-economic characteristics and the choice of banking methods. The results showed that the mean age was 48.9 years while the minimum and maximum ages were 21 and 85 years respectively. Also, the majority of the respondents were women and had large household size. As a State known as fountain of knowledge, high literacy rate was recorded among the respondents. Most (48.4%) of them took trading as primary occupation while few of them were primarily into farming. The main method of banking in the area was the daily money collectors (Alajos). It was recorded that rural households had low savings with the conventional banks. From the probit analysis, it was gathered that the determinants of the choice of banking method in the study area were household size, years of formal education, amount saved with the conventional banks and Income. It was recommended that, in order to enable rural households make use of conventional banks, proper and adequate awareness was advocated. Also, government should invest more on infrastructural facilities especially power supply, to enable the conventional banks extend their services to rural areas. Key words: Rural, households, informal banking methods, socio-economic characteristics. 1.0 Introduction Development of agriculture in Nigeria is of no doubt need a great deal of financial resources which can be sourced from banks, credit agencies , cooperative societies and unions, professional money lenders among others. Rural banking traditionally should service the financial needs of people living in remote areas as they need finance for their socio-economic lives and also to improve their agri-business activities. Given that about 70% of the poor in the developing world still live in rural areas, agricultural development is essential for achieving the Millennium Development Goals. Finance has an important role to play as it helps rural households and enterprises in making productive investments, smoothing consumption, managing risks and coping with shocks. Depending on the local and local business focus, some rural banks develop specialty commercial skills in areas of agribusiness. For example some operate solely within the farm credit system-a network of borrower-owned lending cooperatives and specialized organization specializing in business credit and funding for farming, ranching and other agricultural customers. (Kibet, et al., 2009). Following the recommendations of the Okigbo Financial Review Commission of 1976, the Rural Banking Programme came into being in July 1977. The objectives of the Programme include cultivation of banking habits in rural areas, mobilization of savings and their use for profitable ventures in rural areas, development of agriculture and agro-based industries, reduction of the drift of young men to the cities and achievement of the national objective of self-sufficiency in food production. Adeyemo and Bamire (2005) noted that one of Nigeria’s economic peculiarities is financial dualism. There is a formal financial sector made up of the Ministry of Finance, the Central Bank of Nigeria (CBN), banks, other financial institutions, Nigerian Stock Exchange (NSE), etc. Beside this formal sector exists an informal financial sector with people lending and borrowing directly from each other through methods like esusu, daily contributions and through cooperatives. Adebayo and Adeola (2008), noted that the absence of rural banks or their unwillingness to meet credit need of rural farmers largely account for the wide influence of informal lending institutions on agricultural production in the rural areas. Adeyemo and Bamire (2005) stated that there have been a large number of informal lending