Commercial Banks’ Credit and Agricultural Output in Nigeria: 1980 -2018

International Journal of Research and Innovation in Social Science (IJRISS) | Volume III, Issue VI, June 2019 | ISSN 2454–6186

Commercial Banks’ Credit and Agricultural Output in Nigeria: 1980 -2018

Papka Z. Medugu¹, Innocent Musa², Enam Pagiel Abalis³

¹Department of Economics, Faculty of Social Sciences, Adamawa State University, Mubi, Nigeria.
²Adamawa State Collage of Education, Hong, Nigeria.
³Department of Economics, Faculty of Social Sciences, Adamawa State University, Mubi, Nigeria.

Abstract:-This study empirically examined the impact of Commercial Banks’ credit on Agricultural output in Nigeria, covering the period 1980 to 2018. Annual time series data was employed, which was sourced from Central Bank (CBN) publications such as Statistical Bulletins and Bullions, and National Bureau of Statistics (NBS) publications. Stationary test was conducted on variables to ascertain whether they have unit roots. It was discovered that they were all stationary at first difference. Co integration test however, revealed that long run relationship exists among the variables, also ECM model result showed that the model returns to short run equilibrium after an exogenous shock, with speed of adjustment of negative one (-1), this implies that 100% of all the deviations in the past will adjust to equilibrium. Ordinary least square Method was employed to estimate the relationships among the variables and the result showed positive and significant relationship exists between commercial banks’ credit and Agricultural output in Nigeria, the same relationship also exists between Expenditure made on Agriculture by Government and Agricultural output in Nigeria. Interest rate was negatively related to Agricultural output in Nigeria, the results are all according to a priori expectations. However, commercial banks’ credit performs better than Government Expenditure on Agricultural output in Nigeria. R²=0.98, which means 98% of the variations in agricultural output is explained by the explanatory variables, while high F-statistic of 868 with probability value of 0.0000000 means the model is statistically significant at 5% level. The study based on the findings, recommends that; (i) Government should as a matter of policy through the Central Bank make credits from Commercial Banks available and affordable by lowering interest rate and (ii) Government should increase its expenditure on Agriculture, and ensure proper monitoring to enforce judicious utilization of fund.

Keywords: Agriculture output, bank credit

I. INTRODUCTION

Nigeria is a country endowed with arable land and different climatic zones. The climatic zones are suitable for raising animals, growing of diverse crops for food, other human needs and export. The Agricultural sector for more than three decades has not been performing well, its contribution to GDP has been low and the nation is depending on other countries for food.

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