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COMMERCIAL BANKS CREDIT AND AGRICULTURAL DEVELOPMENT IN NIGERIA
ABSTRACT
Agriculture is the science or practice of farming, including cultivation of the soil for the growing of crops and the rearing of animals to provide food, wool and other products. The main objective of the study is to examine the effect of commercial bank credit on agricultural development in Nigeria. The specific objectives are to: Examine the effect of bank credit on the agricultural output in Nigeria, Assess the effect of government expenditure on agricultural output in Nigeria, Examine the impact of Agricultural Credit Guarantee Scheme Fund on agricultural output in Nigeria and Examine the effect of interest rate on agricultural output in Nigeria using secondary data collected from the Central Bank of Nigeria Annual Reports and Statement of Account. The data were analyzed using econometric techniques Augmented Dickey Fuller and Philip Perron tests for Unit Roots and the Ordinary Least Squares (OLS) Technique. The study shows that credit to agricultural sector, government spending on agricultural sector and agricultural credit guarantee scheme fund have positive and significant effects on agricultural output while interest rate has negative and insignificant effect on agricultural output. The study therefore, concludes that commercial bank credit have positive effect on agricultural output in Nigeria and has increased agricultural production in Nigeria within the period under review. The study recommends that government should strengthen the agricultural credit guarantee scheme by meaningful budgetary allocation in order to enhance its capital base significantly. The Agricultural Credit Guarantee Scheme (ACGS) should improve on their conditions for credit guarantee in order to make agricultural financing attractive to commercial banks. The Central Bank of Nigeria should absorb some percentage of the losses incurred by deposit money banks on their exposure to the agricultural sector. This will further boost the confidence of lending banks and enhance agricultural production in Nigeria Keywords: commercial banks credit and agricultural development in Nigeria