The Social Sciences

Year: 2019
Volume: 14
Issue: 6
Page No. 266 - 275

Impact of Bank Loans on Agricultural Output Growth in Nigeria

Authors : Nwogu Meriam and Emmanuel O. Eyo

Abstract: This study evaluates the effect of lending by financial institutions on Agricultural Gross Domestic Product (AGDP) in Nigeria from 1981-2016. The specific objectives of the study were to compare the volume of loans to agricultural sector from commercial and microfinance banks, compare the impact of commercial and micro finance loans on farm output, assess the impact of bank loans on agricultural sector output in Nigeria. Data used were collected from Central Bank of Nigeria Statistical Bulletin, Annual Reports and National Bureau of Statistics. The data were subjected to unit root, co-integration and error correction tests. The results show that the commercial bank loan was consistently larger than that of the microfinance bank loans. The microfinance bank loan to agriculture was consistently below 5% of the total loans over the period of this study, commercial loans had a positive and significant impact both in the long-run (136.1508) and short-run (11.4509) on agricultural output, the micro loans relate negatively with output, the number of commercial lenders relate positively with agricultural output both in the short and long run periods where as the number of micro finance banks had no significant effect on agricultural output both in the short but in long run periods. On the whole, this study shows that agricultural loans impact positively on agricultural sector output but the extent of that impact has not resulted in a steady and sustained growth that ensures the development of the sector enough to support economic development.

How to cite this article:

Nwogu Meriam and Emmanuel O. Eyo, 2019. Impact of Bank Loans on Agricultural Output Growth in Nigeria. The Social Sciences, 14: 266-275.

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