IIARD International Institute of Academic Research and Development

IIARD International Journal of Economics and Business Management (IJEBM )

E-ISSN 2489-0065
P-ISSN 2695-186X
VOL. 2 NO. 6 2016

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Determinants of Agricultural Credit Supply in Nigeria (1981-2014)

Okezie, C. R. and Erendu, I.

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Abstract

This work examined the determinants of agricultural credit in Nigeria between 1981 and 2014, using secondary data obtained from the CBN statistical publications. Trend analysis was used to describe the observations about the variables used in the study, which included real interest rate, government expenditure on agriculture, exchange rate and foreign private investment. A multiple regression analysis was used to determine the effects of these variables on the amount of credit supplied to the agricultural sector through the Agricultural Credit Guarantee Scheme Fund (ACGSF) of the federal government. The results indicate that there has been increase in the supply of credit to the agricultural sector under the scheme, especially between 2000 and 2012. The results also indicate that increase in real interest rate and foreign private investment had negative effects on the supply of credit to the agricultural sector, at 10% and 1% levels of significance respectively. Other factors government expenditure on agriculture, and exchange rates were positively related to credit supply at 1% levels of significance, respectively. Agricultural credit supply was also significantly related to agricultural production within the same period of time with a positive coefficient of 3.926 which was significant at 1%. It was recommended that the on-going policies of the federal government aimed at attracting foreign investments be sustained and also the financial institutions need to review their lending rates downwards since the real interest rate was seen to inhibit supply of credit to agriculture

determinants, agriculture, credit and supply.

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