DOES FINANCIAL SECTOR REFORMS AFFECT AGRICULTURAL INVESTMENTS IN NIGERIA? A COINTEGRATION AND VAR APPROACH

Abstract

The paper evaluates the effect of financial sector reforms on agricultural investments in Nigeria from 1970-2009 using a cointegration and vector error correction model (VECM) in a long time series analysis. The descriptive analysis shows that the mean agricultural investments of ₦88,101.83 million during financial sector reforms period was higher than ₦538.78 million of the pre-financial sector reforms period and was significantly different at 5 percent (tcal>ttab at P=0.5) while the mean growth rate of 36.36 percent for the prefinancial sector reforms period was higher than 34.25 percent of the financial sector reforms period and was not significantly different at 5 percent in the two periods. The result also reveals that financial sector reforms significantly affect agricultural investments in Nigeria both in the long and short-run. It is recommended that the Nigerian government should adopt strong macroeconomic policies, thereby encouraging investments in the agricultural sector of the country.

Keywords

• Agricultural Investments
• Cointegration
• Financial Sector Reforms
• Vector Autoregressive Approach