On the role of credit in agricultural growth: An Iranian panel data analysis

Abstract

Credit is considered as a major stimulus of economic growth especially in developing economies. Given the critical role of agriculture in Iranian economy in one hand and lack of credit on the other hand, study on the association between credit and sector growth is necessary. Based on a provincial panel data set, this article identifies econometrically the impact of credits provided by non-governmental funds on agricultural growth for the period 2008–2014. Main results introduce credit as a driver of sector growth as one percent rise in credits allocated leads, on average, to 0.59 percent increase in agricultural growth. Same effect is found for labor, public investment and energy inputs. Public supportive policies aiming at empowering of private funds and increase their capital, is recommended.