Bank Credit and Agricultural Sector Growth in Nigeria, 1990-2014: A Vector Error Correction Mechanism (VECM) Investigation.
##article.subject##:
Bank, credit, agricultural, sector, growth and Nigeria.
##article.abstract##
The study examined the relationship between bank credit and agricultural sector growth in Nigeria using time series data over the period, (1990-2014). The study adopted time series data obtained from Central Bank of Nigeria Statistical Bulletin and National Bureau of Statistics. Five variables were employed for this study. These are Agricultural Sector Growth as the dependent variable; whereas, Broad Money Supply, Credit to the Private Sector, Interest Rate and Inflation Rate as the explanatory variables. The study reveals that all the variables of the study are stationary at level, first and second differences. The study shows the existence of at least one co-integrating relationship at 5% level of significance. The study reveals a short-run equilibrium significant relationship between bank credit and agricultural sector growth in Nigeria. There is no causal relationship between bank credit and agricultural sector growth in Nigeria. The study concludes that bank credit has not significantly contributed to agricultural sector growth in Nigeria. The study recommends that for the economy to grow, the private sector should be encouraged in form of concessional and reduced interest rate. The study suggests that regulatory authorities should stabilize the interest rate which is capable of ensuring price stability and maintaining inflation to a single digit. This may build confidence in the banking institutions and will enable them to introduce innovations to boost agricultural sector output in the economy. CBN and policy makers should adopt vibrant economic policies such as interest rate stability, flexible exchange rate, indigenization and economic diversification which will encourage the banks in financing the sector.
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Ikeora, E. J. (2007). Monetary Theory and Policy in a Developing Economy. Cape Publishers International Limited. Wuse Phase 2, Abuja, Nigeria.
Imoughele, L. E. & Ismaila, M. (2014). The impact of bank credit on growth of small and medium scale enterprises: Econometric evidence from Nigeria. Journal of Educational Policy and Entrepreneurial Research, 1(2), 254-261.Retrieved from www.iiste.org on 23/04/14.
Nzotta, S. M. & Okereke, J. E. (2009). Financial deepening and economic development of Nigeria: An empirical investigation. African Journal of Accounting, Economics, Finance and Banking Research, 5(5), 52-65.
Nzotta, S.M. (2014). Money, Banking and Finance: Theory and Practice. Revised Edition, Hudsion-Jude. Owerri, Nigeria.
Obamuyi, T. M., Edun, A. T. & Kayode, O. F. (2011). Bank lending, private sector growth and the performance of the manufacturing sector in Nigeria. European Scientific Journal, 8(3), 19-36. Retrieved from http://eujournal.org on 12/04/14.
Obiandu, J. and Mentu, Y. (2014). The impact of bank private sector credit on the agricultural sector growth in Nigeria. International Journal of Multi- Disciplinary Studies, 3 (45), 124-132.
Obinna, D. G. (2014). The Determinants of bank lending and construction sector growth in Nigeria. Journal of Multi-Disciplinary Studies, 6(15), 99-120. Retrieved from http:/jewsl.org on 18/09/15.
Ochejole, D. (2007). Macro-Economic Theory and Policy. 2nd Edition, Universal Press Publication.
Odedokun, M.O. (1989). Causalities between financial aggregates and economic activities: The result from granger test. Journal of Savings and Development, 23(1), 101-111.
Odedokun, M.O. (1998). Financial Intermediation and Economic Growth in Developing Countries. Faculty of Commerce, University of Swaziland.
Ogar, A.; Nkemare, S.E. & Effiong, C. (2015). Commercial bank credit and its contribution to manufacturing sector in Nigeria. Research Journal of Finance and Accountancy, 5(22), 1-17. Retrieved from http://www.iitse.org on 12/12/15.
Ogbanje, E. L; Yahaya, M. A. & Kolawole, F. (2012). The effect of commercial banks’ loan on the agricultural sector growth in Nigeria. The Nassarawa State University Journal of Agriculture, 8(2), 88-100.
Agu, O. C. & Basil, C. O. (2013). Credit management and bad debt in Nigerian commercial banks: Implication for development. IOSR Journal of Humanities and Social Science, 12(3), 56- 62.
Akpansung, A. O. & Babalola, S. J. (2012). Banking sector credit and private sector growth in Nigeria: An empirical investigation. CBN Journal of Applied Statistics, 2(2), 52-62. Retrieved from http://www.cenbank.org on 11/03/15.
Alajide, B. (2014). The role of banks in financing oil and gas investments in Nigeria. International Journal of Academic Research in Economics and Management Sciences, 4(1), 2234-3634.
Aliyu, M. & Yusuf, A. H. (2013). Impact of private sector credit on the real sector growth in Nigeria. International Journal of Business and Social Research, 3(5), 105-114. Retrieved from http://www.researchgate on 12/05/15.
Andabai, P. W. & Bingilar, Paymaster.F. (2015). Deposit mobilization and lending behaviour of banks in Nigeria. International Journal of Advanced Studies in Business Strategies and Management, 3(1), 243-255. Retrieved from http://www.internationalpolicybrief.org/Journals. on 23/10/15.
Andabai, P. W. (2011). An empirical assessment of money transmission mechanism in Nigeria. A Multi-Disciplinary Journal of the University of Calabar Graduate School, 2(1&2), 138-152.
Andabai, P. W. (2013). Determinants of public policies and the manufacturing sector growth in Nigeria. African International Multi-Disciplinary Journal, 4(4), 237-251. Retrieved from http://www.afrrevjo.net. on 23/10/15.
Andabai, P. W. (2014). Private sector development and economic growth in Nigeria. International Journal of Advanced Research in Statistics, Management and Finance, 2(1), 15-25. Retrieved from http://www.internlpolicybrief.org/Journals. on 11/12/15.
Aniekan, O. A & Babalola, S. J. (2009). Banking sector credit and economic growth in Nigeria. CBN Journal of Applied Statistics, 2(2), 34-45.
Anosike, N. M. (2013). Credit facilities in the financial institutions for financing construction projects in Nigeria. Journal of Social Sciences and Management, 3(10), 17-27. Retrieved from http:// www. kabanni.abu.edu.ng, org on 11/05/15.
Aurangzeb, D. (2012). Contributions of banking sector in real sector growth: A case of Pakistan. Economics and Finance Review, 2(6),45-54. Retrieved from http://www.businessjournalz.org/articlepdf/EFR on 23/06/2015.
Ayeni, R. K. (2014). Macroeconomic determinants of bank credit and private sector investment; An ARDL approach: Evidence from Nigeria. Global Advanced Journal of Management Business Studies, 3(2), 82-89. Retrieved from http://gerij.org./full-articles.ng.on 24/03/14.
Babajide, J.K. & Madabuichi, D.R. (2013). Banking services and communication sector development in Nigeria. Journal of Research in Economics and Management Studies, 6(1&3), 22-36. Retrieved from www.info/aejournals/eejorind .org on 21/04/15.
Bakular, S. (2013). The role of financial development and communication sector performance in Nigeria. Journal of Sustainable Development, 4(6), 32-44.
Banam, K.C. (2010). Impact of financial liberalization on economic growth in Iran. Journal of Middle Eastern Finance and Economics, 7(23), 1-35.
Bazere, A. T. (2014). Effect of sectoral allocation of private sector credit on oil and gas sector development in Nigeria. Journal of Advanced Studies in Business Research, 3(23), 134-145.
Bencivenga, V. R. & Smith, B. D. (1991). Financial intermediation and endogenous growth. Review of economic studies, 58(23), 195-209.
Busari, D. & Olayiwola, S. A. (2001). Unleashing the private sector in Nigeria. Journal of Political Economy, 10(46), 1006-1038.
CBN (2014). Retrieved from www.cenbank.org/Out/2015/SD/2014%20Statistical%20Bulletin Section%20A_Final.xlsx on 14/08/2015.
Chang, P. C.; Jai, C. & Wang, Z. (2010). Bank fund reallocation and private sector growth: Evidence from China. Science Directorate, 34(11), 2753-2766.
Chidoka, A., Lambo, G. & Ajunamo, S. (2015). Financial development and communication sector development in Nigeria. Research Journal of Interdisciplinary Studies, 2(1&2), 53-65. Retrieved from http://.rjdi. edu.ng on 16/10/15.
Chimaobi, O.P. (2010). Inflation and economic growth in Nigeria. Journal of Sustainable Development, 3(2), 23-34.
Ibenta, Steve N.O. (2012). Research Monograph: Guidelines for Seminar Papers, Theses Project Reports. 22-28 Regina Caeli Road, Awka, Anambra State.
Ijaija, G.T. & Abdulraheem, A. (2000). Commercial bank credit to the agricultural sector and poverty reduction in Nigeria: A calibration analysis. International Tropical Researh, 1(1), 43-58. Retrieved from http://www.unilorin.edu.ng on 23/07/14.
Ikeora, E. J. (2006). Bank Lending, Principles and Practice. Book Point Ltd, Abbot Communications, 71 Old Market Road, Onisha, Anambra State.
Ikeora, E. J. (2007). Monetary Theory and Policy in a Developing Economy. Cape Publishers International Limited. Wuse Phase 2, Abuja, Nigeria.
Imoughele, L. E. & Ismaila, M. (2014). The impact of bank credit on growth of small and medium scale enterprises: Econometric evidence from Nigeria. Journal of Educational Policy and Entrepreneurial Research, 1(2), 254-261.Retrieved from www.iiste.org on 23/04/14.
Nzotta, S. M. & Okereke, J. E. (2009). Financial deepening and economic development of Nigeria: An empirical investigation. African Journal of Accounting, Economics, Finance and Banking Research, 5(5), 52-65.
Nzotta, S.M. (2014). Money, Banking and Finance: Theory and Practice. Revised Edition, Hudsion-Jude. Owerri, Nigeria.
Obamuyi, T. M., Edun, A. T. & Kayode, O. F. (2011). Bank lending, private sector growth and the performance of the manufacturing sector in Nigeria. European Scientific Journal, 8(3), 19-36. Retrieved from http://eujournal.org on 12/04/14.
Obiandu, J. and Mentu, Y. (2014). The impact of bank private sector credit on the agricultural sector growth in Nigeria. International Journal of Multi- Disciplinary Studies, 3 (45), 124-132.
Obinna, D. G. (2014). The Determinants of bank lending and construction sector growth in Nigeria. Journal of Multi-Disciplinary Studies, 6(15), 99-120. Retrieved from http:/jewsl.org on 18/09/15.
Ochejole, D. (2007). Macro-Economic Theory and Policy. 2nd Edition, Universal Press Publication.
Odedokun, M.O. (1989). Causalities between financial aggregates and economic activities: The result from granger test. Journal of Savings and Development, 23(1), 101-111.
Odedokun, M.O. (1998). Financial Intermediation and Economic Growth in Developing Countries. Faculty of Commerce, University of Swaziland.
Ogar, A.; Nkemare, S.E. & Effiong, C. (2015). Commercial bank credit and its contribution to manufacturing sector in Nigeria. Research Journal of Finance and Accountancy, 5(22), 1-17. Retrieved from http://www.iitse.org on 12/12/15.
Ogbanje, E. L; Yahaya, M. A. & Kolawole, F. (2012). The effect of commercial banks’ loan on the agricultural sector growth in Nigeria. The Nassarawa State University Journal of Agriculture, 8(2), 88-100.
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2018-04-04
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Articles
