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,

Ubi, Johnson Johnson – Johnsonubi@Yahoo.Com
Department Of Accountancy,
Federal Polytechnic Ukana,
Essien Udim L.G.A,
Akwa Ibom State,

Until the mid-seventies, agriculture has been the primary foreign exchange earner for Nigeria.
Unfortunately, it has lost its prime position to the mineral sector. Factors like inadequate capital
is considered as the single most important factor affecting the performance of the agricultural
sector. 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
(FCM) 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.

Download Full Text

Leave a Reply

Your email address will not be published. Required fields are marked *