Deposit Money Bank Credit and Agricultural Sector Output in Nigeria

Abstract

This research work is focused on deposit money bank credit and agricultural sector output in Nigeria. The core objective of this study is to examine the effect of deposit money bank credit on agricultural sector output in Nigeria. The data were obtained from the Central Bank of Nigeria Statistical Bulletin for the period under study. The Autoregressive Distributive Lag approach was used to regress the deposit money bank credit variables on agricultural sector output which is the dependent variable. A Stationarity test was conducted in order to circumvent biased results. The unit root test was followed by the co- integration procedure to examine whether there is existence of long run relationship between the variables. The error correction model (ECM) was used to provide information on the speed of adjustment between the two variables. The empirical analyses showed that deposit money bank credit has both short run and long run significant effect on agricultural sector output in Nigeria. The study concludes that deposit money bank credits indicators are good predictors of growth for agricultural sector output in Nigeria. The study recommends that banks should keep maintaining the level of their credit extension to the agricultural sector as well as ensuring prudent management of the fund. This will assist in the sustenance of agricultural sector output growth in Nigeria.