THE IMPACT OF COMMERCIAL BANK CREDIT ON AGRICULTURAL OUTPUT IN NIGERIA


 

THE IMPACT OF COMMERCIAL BANK CREDIT ON AGRICULTURAL OUTPUT IN NIGERIA

Abstract

This study was carried out to examine the impact of commercial banks’ credits on agricultural
productivity in Nigeria on bank credit . The aim is to determine the relationship between commercial banks
credit and agricultural productivity in the Nigeria economy on bank credit. The statistical tool of analysis is the
Ordinary Least Squares (OLS) techniques. However the variables were subjected to the Unit Root
Test to ensure stationarity before the application of the OLS. On the whole, three hypotheses
were tested; all the alternative hypotheses were validated by the OLS result. The t-calculated of
commercial banks credit has a value of 6.28 which is greater than the t-critical of 1.96. This is an
indication of positive relationship between commercial banks’ credit and agricultural
productivity. The t-calculated of interest rate on commercial banks credit has a value of -9.38 as
against 1.96 t-critical. This is an indication of a negative relationship between interest rate and
agricultural productivity on bank credit. While the t-calculated of government spending, as a complimentary
variable, has a value of 3.42 as against the 1.96 of t-critical on bank credit. This, as the case of hypothesis one,
is also indication of significant positive relationship between government spending and
agricultural productivity in Nigeria on bank credit. Based on the findings, we recommended that the
Agricultural Credit, Guarantee Scheme should improve on their conditions for credit guarantee
in order to make agricultural financing attractive to commercial banks. Furthermore, the paper
advocates amongst others, that the government should subsidized interest rate to the
International Journal of Academic Research in Business and Social Sciences
agricultural sector and stop fuel subsidy as this will provide more benefit to the society than the
fuel subsidy.agricultural output.

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