IMPACT OF COMMERCIAL CREDIT ON AGRICULTURAL GROWTH IN NIGERIA

Abstract

The study examined the impact of commercial credit on agricultural growth in Nigeria. The study particularly determined the effect of commercial bank loan on agriculture on agricultural growth in Nigeria; assessed the effect of interest rate on commercial banks’ credit to agriculture on agricultural growth in Nigeria and examined the relationship commercial banks total asset and agricultural growth in Nigeria. The quantitative and qualitative research design was adopted in the study. Annual time series data spanning thirty-one years (1989-2020) was obtained in the study. Data gathered in the study was estimated using descriptive statistics, unit root analysis, Autoregressive Distributed Lag (ARDL) analysis, parsimonious error correction model and other post estimation tests. Discoveries from the study suggested that commercial bank loan on agriculture affects agricultural growth positively and insignificantly both in the short and long run; interest rate on commercial banks’ credit to agriculture exerts negative significant impact on agricultural growth both in the long and short run and commercial bank total assets exerts positive significant effect on agricultural growth in the long run and an insignificant positive effect on agricultural growth in the short run. Following these findings, the study advocated that commercial banks should increase loan channeled to the agricultural sector as such is required to enhance the growth of the sector; government through the Central Bank of Nigeria should urgently make policies that would cause interest rate charged on agricultural loans to maintain single digits towards making interest payment favorable and ultimately encourage loan taking and government should shoot up agricultural sector expenditure and cause improvement in the monitoring of the sector.