Commercial Bank Credit and Agricultural Growth Outcomes in Nigeria: An Empirical Analysis

Abstract

This study investigates the impact of commercial bank loans on agricultural growth outcomes in Nigeria. It uses Augmented Dickey Fuller unit root test in order to examine stationarity of model input variables, documenting that all variables were stationary either at levels I(0) or at first difference I(1). The study then employed the ARDL model and Error Correction Model to estimate the long-run and short-run effects of the variables. The long-run model results showed that commercial bank credit and government expenditure had a positive relationship with agricultural output, while exchange rate had a negative effect. The error correction model results revealed that government expenditure had a positive relationship with agricultural growth outcomes, while exchange rate and interest rates had a negative effect. In conclusion, the research found that commercial bank credit had a significant positive effect on agricultural growth outcomes in Nigeria, and recommended that commercial banks' lending policies and procedures should be flexible to accommodate more farmers. The results also imply that the government should provide adequate funds for the agricultural sector, specifically increasing its financial grants to small-scale farmers, to promote agricultural output and economic growth in the country.

Keywords

• commercial bank
• agricultural credit
• growth outcomes
• nigeria.