Greener Journal of Agricultural Sciences

Excellence and Timeliness


Change Language

Ogbonna and Osondu

Greener Journal of Agricultural Sciences Vol. 5 (3), pp. 084-095, June 2015.

 ISSN: 2276-7770  

Research Paper

Manuscript Number: 051815074



Determinants of Supply of Funds to Agricultural Sector from Formal Sources in Nigeria from 1992 to 2012


Ogbonna, S. I. and *Osondu, C. K.


Department of Agricultural Economics and Extension Abia State University, Umuahia Campus, PMB 7010, Umuahia, Abia state, Nigeria.


The study was carried out in Nigeria. Specifically the study analyzed performance of formal credit sources by amount of loan disbursed to agriculture from 1992 to 2012 and determined factors that influenced volume of funds supplied to agricultural sector from formal sources in Nigeria from 1992 to 2012. Time series data, covering the periods of 1992 – 2012, culled basically from the Central Bank of Nigeria’s Statistical Bulletin were used. The data collected were analyzed using descriptive statistics and two Stage Least Square regression technique. The result of the performance of the formal credit sources by amount of loan disbursed to agriculture showed that commercial banks under the ACGS performed better than the Microfinance banks and Bank of Agriculture which was evident by the amount disbursed (N48.8bn) by commercial banks, with Microfinance banks disbursing N 32.3m and BOA disbursing N 14.7m to agriculture over the period under review. The 2SLS results showed that the volume of funds supplied to agricultural production from formal sources was affected positively by interest rate and commercial banks’ liquidity ratio and negatively by banks’ cash reserve ratio (CRR) and index of World Agricultural Commodity Prices. These variables were statistically significant at 1.0 % level of probability except the index of World Agricultural Commodity Prices which was significant at 5.0 % alpha level. The diagnostic statistics posted R2 and F- ratio values of 0.7904 and 6.46 respectively with Durbin Watson estimates of 2.323311. The federal government must consider interest rate regulation as a veritable tool for making credit accessible to farmers at affordable levels where transaction costs will not be too high as to discourage farmers willing to invest or expand their investment to withdraw from doing so.


Key words: Agricultural sector, bank loans, credit supply, transaction cost.

Post-review Rundown

   View/get involved, click [Post-Review Page]


African Development Bank (ADB) (2006). National Programme for Food Security (NFPS). Staff Appraisal Report.


Adegeye, A.J. and Dittoh J.S. (1985). Essentials of Agricultural Economics. Impact Publishers Nigeria Limited, Ibadan.


Adekanye, F. (2005). Elements of Banking in Nigeria, Lagos: F and A Publisher. Agricultural development: a case study of small-scale food production in Ondo State, Nigeria. Samaru Journal of Agricultural Education, 3 (1 and 2), 29-35.


Akintola, S. (2004). Banks Move against Soludo. Nigerian Tribune (July 23rd), p. 24.


Akpan, H. E. (1999). Public Expenditure and Economic Growth in a Petroleum Based Economy: Nigeria (1960-1992). International Journal of Social Sciences, Faculty of Social Sciences, University of Uyo, Vol. 1.


Asuquo, I., Ofem, U., and Ajah, E. (2014). Credit Reserve and the Demand for Agricultural Loans in Cross River State, Nigeria. Journal of Biology, Agriculture and Healthcare. 4(16): 17 – 22.


Central bank of Nigeria (CBN), (2003). Agricultural Development: Issues of Sustainability. In: O.I. Nannna, S.O. Alade.


E. O. Odoko (Eds.): Cotemporary Economic Policy Issues in Nigeria. Abuja: CBN Publications, pp.185-222.


CBN, (2005). Statistical Bulletin. CBN. Abuja



CBN, (2006a). Economic and Financial Review Vol, 25.No.4.


CBN, (2006b). CBN Statistical Bulletin Vol.15 December 2006.


CBN, (2007a). Statistical Bulletin, Abuja: CBN Publications.


CBN. (2007b). Annual Report and Statement Account. December 2007. Abuja. Nigeria.


CBN. (2007c): Agricultural Credit Guarantee Scheme Fund of Nigeria (ACGSF): An impact assessment. Study conducted by Centre for resource Analysis and Management for the Governing Board of the ACGSF, Abuja.


CBN. (2010). Developments in the External Sector. External Sector Committee Reports, Quarter3, Issue 1 No. 3, P. 6.


CBN. (2012). Central Bank of Nigeria Annual Report 2012. Pp.157-159.


Central Bank of Nigeria (2012): Statistical Bulletin. Central Bank of Nigeria, Abuja, Nigeria.


Coker, A.A. (2008). Empirical Analysis of Federal Government Expenditure Policy on Agriculture in Nigeria (1960 – 1998). Ph.D thesis,Department of Agricultural Economics, University of Nigeria, Nsukka.


Comptroller's Handbook, (1998). Agricultural Lending. Comptrollers of Currency and Administrator of National Bank. New York. Federal Reserve Bank.


Egbe, A.B. (1990). "Financial Institutions and Agricultural Finance: The Role of CBN". Proceedings of a seminar organized by the CBN, CBN Lagos.


Ghosh, B.K. (2010). Growth and Variability in the Production of Crops in West Bengal Agriculture. Trends in Agricultural Economics, 3(3): 135 – 146.


Gujarati, O. M. (2006). Essentials of Eonometrics. 3rd Ed. McGraw-Hill International: New York.


Koutsoyiannis, A. (2001). Theory of econometrics (2nd Edition.). Palgrave: New York. Pp 346-395.


National Population Commission (NPC). (2006). Census Report. National Population Commission (NPC). Abuja, Nigeria.


Navajas, A. R, (2001). Credit Guarantee Schemes Conceptual Framework: Financial System Development Project. Technical Bulletin No. 1. Bolivia - June Publication of GTZ/FONDESIF.


Nwaru, J. C, Onyenweaku, C. E.; Nwagbo, E. C and Nwosu, A. C. (2004). Determinants of Rural Farm Loan Repayment: Implications for Rural Credit Markets Development in Imo State, Nigeria. Journal of Agriculture and Food Sciences, 2(1): 48-58.


Oboh, V. U. (2008). Farmers’ allocative behavior in credit utilization: a case study of arable crop farmers in Benue State, Nigeria. PhD dissertation, Agricultural Economics and Extension Programme, Abubakar Tafawa Balewa University, Bauchi, Nigeria.


Oboh, V. U. and Ekpebu, 1. D.(2011). Determinants of formal agricultural credit allocation to the farm sector by arable crop farmers in Benue State, Nigeria. African Journal of Agricultural Research, 6(1), 181-185.


Ogiri, P. (2004). Agriculture and the Food basket Myth; Implication for Food Security and Agricultural Policy Reforms in "Nigeria. Markurdi, Aboki Publishers.


Oguamanam, H. M. (1996). "Commercial Bank Credit to Agricultural Sector in Nigeria". Paper presented at The 17th Annual Conference of CBN Agricultural Credit Officers held at Hill Station Hotel, Jos.


Ojo A. T. (2002). The future of community banks in Nigeria. First Bank of Nigeria Plc Quarterly Review, 2: 45-61.


Onoja, A.O., Onu, M E. and Ajodo-Ohiemi, S. (2013). Contributions of Financial Sector Reforms and Credit Supply to Nigerian Agricultural Sector (1978-2009). Central Bank of Nigeria Journal of Applied Statistics. Vol. 2, No. 2.


Olaitan M A, (2006). Financing for small and medium enterprises Nigeria's agricultural credit guarantee scheme fund. Journal of International Farm Management, 3(2): 1-9.


Olokoyo. F. 0. (2011). ''Determinants of Commercial Banks' lending Behaviour in Nigeria". International Journal of Financial Research, Vol. 2(2): Pp. 45-53.             


Onyenweaku, C.E. (1993). Investigation of the Hypothesis of Deceleration in Crop Production in Nigeria, 1960/61 – 1987/88, Modeling Simulation and Control D. France, 7(1): 27 – 40.


Onyenweaku, C.E. (2004). Stagnation, Acceleration and Deceleration in Agricultural Production in Nigeria, 1970 – 2000. Journal of Agriculture and Food Science, 2(2):131 – 140.


Udensi A.I., Anyiro C.O., Orebiyi J.S., Eze C.C., Ohajianya D.O and Ezeh C.I (2013). Farmers’ Credit Stock Determinants from Commercial Banks and its Effects on Agricultural Production in Nigeria. World Research Journal of Tropical Agriculture.1(2):27-30.

Call for Articles/Books

Call for Scholarly Articles

Authors from around the world are invited to send scholary articles that suits the scope of this journal. The journal is currently open to submissions and will process and publish articles daily, immediately they are ready.

The journal is centered on quality and goes about its processes in a very timely fashion. Seasoned editors/reviewers will be consulted to review each article(s), profer quality evaluations and polish the articles with expertise before publication.

Use our quick submit button to submit or simply send your article(s) as an e-mail attachment to or

Call for Books

You are also invited to submit your books for online or print publication. We publish books related to all academic subject areas.    Submit as an e-mail attachment to


Login Form

Other Journals