EFFECT OF CREDIT POLICIES ON AGRICULTURAL PRODUCTION IN NIGERIA (1980 - 2022)
DOI:
https://doi.org/10.61841/p3729821Abstract
The purpose of study is to analyze the effect of credit policies on agricultural production in Nigeria. The study examined the effect of deposit money bank credit, government credit, agricultural credit and interest rate on agricultural production in Nigeria. Ex-post facto research method was used to explore the relationship between credit policies and agricultural production in Nigeria. The data used was sourced from Central Bank of Nigeria Statistical Bulletin and other secondary sources from 1980 to 2022. The study employs Augmented Dickey-Fuller unit root (ADF), Johansen co-integration test and Vector Error Correction Model (ECM) as method of data analysis. The findings reveal notable patterns in the dynamics of credit and agricultural production. Agricultural production (β = 1.000000) exhibits a strong positive long-term relationship with itself, suggesting persistent influences on future agricultural production based on historical values. Bank credit (β = 0.135818), to agriculture is identified to have a significant positive long-term relationship, gradually building over time. Conversely, credit by the government (β = -146.7930), though negatively related in the long run, lacks statistical significance, indicating a less well-defined influence. The agricultural credit guarantee fund scheme (β = 0.700015) demonstrates a significant positive long-term relationship, implying its potential to boost agricultural production. However, interest rates (β = -39543.53), while showing a negative relationship, were statistically insignificant in the long run, indicating a need for further investigation into their impact on agricultural production. It is concluded that bank credit and agricultural credit guarantee fund scheme positively have long-term significant effect on agricultural production. It is recommended among others that bank should implement proactive bank credit policies that support gradual and sustainable increases in credit to the agricultural sector. This includes regular reviews and adjustments to lending practices to ensure that credit to agriculture continues to build gradually over time, stimulating agricultural growth and development.
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