Impact of Agricultural Financing Policy and Deposit Money Bank Loan on Agricultural Sector Productivity in Nigeria

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2017

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Abstract

Abstract In transforming the economic situation of Nigeria, the impact of agriculture cannot be overemphasized. Agriculture was the primary foreign exchange earner for Nigeria, until the mid-seventies when it lost its prime position to the mineral sector. One important factor affecting agricultural sector productivity is inadequate capital. The objective of the study is to evaluate the impact of agricultural financing policy and deposit money bank loans to agricultural sector on agricultural productivity. The study used time series linear regression model employing data covering the period of 1981 and 2015. The result revealed that deposit money bank loans (CBF) and agricultural financing policy proxy by Agricultural Credit Guarantee Scheme Fund (ACGSF) have significant positive impact on agricultural productivity in Nigeria while lending rate (LR) shows a significant negative impact on agricultural productivity. It is recommended that commercial bank should complement the agricultural financing policy of the government by making agricultural finance accessible, easier and at low rate of interest for farmers. Farmers should also be sensitized on the benefit of accessing funds from the policy and banks to enhance productivity. The study further recommends that government should encourage financial inclusion for the farmers.

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Agricultural Financing, Deposit Money Bank, Lending Rate, Agricultural Productivity

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