Greener Journal of Agricultural Sciences

Greener Journal of Agricultural Sciences Vol. 8 (3), pp. 065-073, March 2018.

ISSN: 2276-7770  

Research Article

Manuscript Number: 031218042

 

(DOI: http://doi.org/10.15580/GJAS.2018.3.031218042)

 

Deposit Money Banks’ Credit and Agricultural Sector Performance in Nigeria

 

 

EKINE Data I. and ONUKWURU Fyneface Manunyewho

 

 

Department of Agricultural and Applied Economics and Extension, Faculty of Agriculture, Rivers State University, Nkpolu- Oroworukwo, Port Harcourt

Abstract

 

The study empirically examines the effect of deposit money banks credit on agricultural sector performance in Nigeria from 1986 to 2016. The data for the empirical analysis was sourced from secondary data sources various issues of the CBN statistical bulletin. The study used agricultural sector output (ASP) to proxy agricultural sector performance as the dependent variable whereas Deposit Money Banks’ Credit to Agricultural Sector (BCA) was the major explanatory variable while Interest Rate (INR) and Government Expenditure on Agriculture (GEA) are the check regressors as to enhance the explanatory power of the model. The study employed descriptive statistic, Ordinary Least Squares (OLS), unit root test, co-integration and ECM methods of analysis as the analytical tools. The results revealed that there is no co-integrating (or long run) relationship between deposit money banks’ credit to agricultural sector and the performance of agricultural sector in Nigeria during the period of study; Deposit money banks’ credit to agricultural sector (BCA) had a          positive and a significant impact on Agricultural Sector performance (ASP); Interest Rate (INR) had a negative insignificant relationship with Agricultural Sector performance (ASP). Also, the study revealed that government expenditure on agricultural sector (GEA) had a positive insignificant relationship on Agricultural Sector performance (ASP). Consequent upon the above, it is recommended that efforts should be made by the government and private individuals to encourage or increase investment in the agricultural sector.   The lending rate on loans to the agricultural sector should be reviewed and fixed at a rate that would encourage farmers to acquire loans from deposit money banks.

 

Keywords: Deposit Money Banks, Interest Rate, Banks Credit, Government Expenditure, Agricultural Sector.

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