BANK CREDIT ACCESS AND ITS IMPACT ON AGRICULTURAL PRODUCTIVITY IN NIGERIA

Abstract

Bank credit access is a prominent factor affecting the performance of the agricultural sector. Hence,
the performance of the agricultural sector in Nigeria largely depends on the provision of affordable
credit services to both the rural and urban populations engaged in the agricultural sector. Several
policies have been made to solve these problems in which the banks have been targeted to provide
pivotal roles in the area of funding through the provision of credits. Hence, the main objective of this
study is to examine the relationship between deposit money bank (DMB) credit, interest rate, and
agricultural productivity in Nigeria. This study used the auto-regressive distributive lag (ARDL)
model and bounds test with the aid of Eviews software to estimate the dynamic, short, and long-run
relationship among the variables. The time series data are extracted from the CBN Annual and
Quarterly Reports, the CBN Statistical Bulletin, and World Development Indicator (online). These
data include the banks' credit to the agricultural sector, interest rates, and agricultural GDP. Some
information was also retrieved from the websites. The result of the bounds test revealed that bank
credit contributed to a 65% increase in agricultural productivity in Nigeria. This study, therefore,
recommended a low bank interest rate to give room for better agricultural productivity.

Keywords: Bank credit, Agricultural productivity