The Impact of Commercial Bank’s Loan on Agricultural Output in Nigeria (1981-2017)

ABSTRACT

This study examines the impact of commercial banks loan on agricultural output in Nigeria from 1981-2017. Secondary data was used which was sourced from World Bank development indicators (WDI), CBN statistical bulletins, Nigeria bureau of statistics. The data collected was analyzed using ordinary least square technique, cointegration test, unit root test and granger causality techniques. The OLS result of the study revealed that commercial banks credit has no significant impact on agricultural output under the period review while exchange rate and population has a positive and statistically significant impact on agricultural output in Nigeria from 1981 to 2017. The result of the of the unit root test revealed that agricultural output and population were stationary at level however commercial banks credit, interest rate, exchange rate and economic growth gained stationary at first difference. The results of the pairwise granger causality test revealed that there is a unidirectional causality from economic growth to agricultural output while commercial banks credit and interest rate have no causality within the period of 1981 to 2017. Therefore based on the results of the findings it was recommended that efforts should be put in place by government and creditors to agriculture to ensure that credit meant for farmers are directed towards the real farmers and are use purposefully for farming activities.