AFRAG038

The Impact of Bank Lending on the Development of Agricultural Sector in Nigeria

Edom, Edom Onyam edomedomonyam@yahoo.com

Asukwo, Joseph Ita joeimaita@yahoo.com

Department of Banking and Finance, Faculty of Management Sciences, University of Calabar, P.M.B 1115, Calabar, Cross Rivers State, Nigeria.

Ubi, Johnson Johnson johnsonubi@yahoo.com Department Of Accountancy, Federal Polytechnic Ukana, Akwa Ibom State, Nigeria.

Abstract

This study examined the impact of bank lending on the development of agricultural sector in Nigeria, using time series data from 2010 to 2018. The objectives of the study were to ascertain the effect of commercial bank credit disbursement on the development of agricultural sector in Nigeria, to determine the extent to which government funds allocation has boosted agricultural productivity in Nigeria, to ascertain the effect of agricultural produce price on agricultural productivity in Nigeria and to ascertain the effect of agricultural credit guarantee scheme funds on the agricultural sector in Nigeria. To achieve the above objectives, the study employed the multiple regression statistical technique/ordinary least square (OLS) and error correction model (ECM) to obtain estimates of the parameters of economic relationship from statistical observations. The result showed that there is a negative and significant relationship between commercial bank credit to the agricultural sector and agricultural output index in Nigeria, the study also showed a positive and significant relationship between agricultural  credit  guarantee  scheme loan and  agricultural  production  output index. Again, government funds allocation has a negative and significant effect on agricultural production index. And there is a significant and positive relationship between agricultural produce price and agricultural production index. Based on the findings, it was recommended that Banks should make more credit facilities available to farmers to enable them boost their productive capacity. Again government should ensure vigorous implementation of agricultural credit guarantee scheme fund by purpose to farmers for improved productivity. Also, there should be increase financial allocation to the agricultural sector for increase productive output, and finally, government should ensure that prices of agricultural produce are pegged in such a way that the beneficiaries of agricultural credit facilities will not find it difficult to repay the loans.

Keywords: Agricultural Production Output Index; Commercial Banks’ Credit; Agricultural Produce Price; Government Financial Allocation to the Agricultural Sector.