Abstract
Purpose. The purpose of this study was to investigated the impact of commercial bank credits on agricultural output in Nigeria over the period 1980 to 2015 by setting three specific objectives which are to examine the trend of commercial bank credit and agricultural output in Nigeria; to investigate the effect of commercial bank credit on agricultural output in Nigeria and to investigate the effect of commercial bank credit on subsector of agriculture in Nigeria. The trend analysis and the impact of commercial bank credit on subsector of agriculture in Nigeria make this work unique and different from other studies in this area. Trend analysis was used to achieve the first objective and fully modified ordinary least square (OLS) for objective two and three. Methodology. The study employed Fully Modified Ordinary Least Squares (FMOLS) approach. Findings. It was evidenced that interest rate on commercial banks’ credit to agriculture and deposit money bank’s assets are statistically significant in determine agricultural output in Nigeria within the period considered. Also, commercial bank loan on agriculture and deposit money bank’s assets determine the output of crop production in Nigeria; commercial bank loan on agriculture and interest rate on commercial banks’ credit to agriculture determine the output of livestock production in Nigeria and commercial bank loan on agriculture and interest rate on commercial banks’ credit to agriculture determine the output of forestry in Nigeria while commercial bank loan on agriculture and interest rate on commercial banks’ credit to agriculture determine the output of fishing in Nigeria. Limitations. This study is limited because the study does not include other variables that determine the output of agricultural sector in Nigeria. Also, other theories and methods can still be used by other researcher to make it different from this work. Originality. This is an original work and has neither been published in any other peer-reviewed journal nor is under consideration for publication by any other journal.
Highlights
The role of agriculture in human development cannot be overemphasized
The purpose of this study was to investigated the impact of commercial bank credits on agricultural output in Nigeria over the period 1980 to 2015 by setting three specific objectives which are to examine the trend of commercial bank credit and agricultural output in Nigeria; to investigate the effect of commercial bank credit on agricultural output in Nigeria and to investigate the effect of commercial bank credit on subsector of agriculture in Nigeria
Agriculture is the economic mainstay of the majority of households in Nigeria and is a significant sector in Nigeria’s economy (Ayeomoni and Aladejana, 2016)
Summary
The role of agriculture in human development cannot be overemphasized. This includes provision of the basic food requirements of human populations; it is the predominant occupation of the working population, especially in agrarian nations; an important way of life, culture and custom of the people (Olagunju and Ajiboye, 2010). The important benefits of the agricultural sector to Nigeria’s economy include: the provision of food, contribution to the gross domestic product (GDP), provision of employment, the provision of raw materials for agro-allied industries, and generation of foreign earnings labour (until the early 1970s; agricultural exports were the main source of foreign exchange earnings) (Ogbonna and Osondu, 2015). Commercial banks are interested in giving out loans and advances to their numerous customers bearing in mind the three principles guiding their operations which are profitability, liquidity and solvency. Commercial banks decision to lend out loans are influenced by a lot of factors such as the prevailing interest rate, volume of deposits, the level of their domestic and foreign investment, banks liquidity ratio, prestige and public recognition to mention a few (Olokoyo, 2011)
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