IIARD International Institute of Academic Research and Development

International Journal of Agriculture and Earth Science (IJAES )

E- ISSN 2489-0081
P- ISSN 2695-1894
VOL. 9 NO. 5 2023
DOI: https://doi.org/10.56201/ijaes.v9.no 5 .2023.pg 15.26

---

Formal Agricultural Credit Schemes and Economic Growth in Nigeria

Eruba Dimgba , Rachael Morris & Ikechi Agbugba

---

Abstract

This study examined the impact of formal agricultural credits on economic growth in Nigeria between 1981 and 2021. The specific objectives were to determine the effects of the agricultural credit guarantee scheme fund, bank loans and advances to agriculture, foreign aid to agriculture and the cost of funds on real gross domestic product (GDP) growth. The data required for the analysis were obtained from the Central Bank of Nigeria (CBN) Statistical Bulletin and the Organization for Economic Cooperation and Development (OECD) Statistics. The descriptive statistics, fully modified ordinary least squares (FM-OLS) and parsimonious error correction model (ECM) formed the basis for the data analysis. The unit root and Johansen cointegration tests results showed that the variables are all stationary at the first difference and cointegrated at the 5 per cent significance level. The long-run regression results showed that the agriculture credit guarantee scheme fund positively affected real GDP growth. The results further showed that bank loans and advances to the agriculture sector have a positive and significant effect on real GDP growth. It was found that 1 per cent increase in that bank loans and advances to the agriculture sector leads to 0.0378 per cent in real GDP growth. The effect of foreign aid to agriculture on real GDP growth was positive but insignificant at the 5 per cent significance level. Evidence of a positive and significant effect of the cost of funds on real GDP growth was established from the long-run results. The estimated coefficient showed that the real GDP growth increases by 0.00356 per cent due to a 1 per cent increase in the cost of funds. The short-run results showed that the coefficient (-0.5125) of the error correction term is negative and significant at the 5 per cent significance level, indicating that about 51.25 per cent distortion from the long-r

keywords:

Agricultural credits, economic growth, bank loans, foreign aid and interest rates

---

References:

Adesanya, T. A., & Ajala, O. A. (2019). Agricultural credit and economic growth in
Nigeria. Humanities, Management, Arts, Education & The Social Sciences, 7(1), 11-20.
Adewale, A. T., Lawal, O. A., Aberu, F., & Toriola, A. K. (2022). Effect of credit to farmers and
agricultural productivity in Nigeria. East Asian Journal of Multidisciplinary Research, 1(3),
377-388.
Ajala, O. A., & Adesanya, T. A. (2022). Effect of corporate tax on the relationship between capital
structure and firm value of deposit money banks in Nigeria. NDA Journal Of Management
Sciences Research, 2(1), 94-103.
Engel, R. F., & Granger, C. W. (1987). Co-integration and error correction: representation,
estimation, and testing. Econometrica: journal of the Econometric Society, 251-276.
Gurley, J. G., & Shaw, E. S. (1967). Financial structure and economic development. Economic
development and cultural change, 15(3), 257-268.

DOWNLOAD PDF

---

Back