Saudi Journal of Economics and Finance (SJEF)
Volume-2 | Issue-02 | 57-64
Review Article
An Empirical Investigation into the Nexus between Agricultural Financining and Economic Growth in Nigeria
KEJI Sunday Anderu
Published : April 30, 2018
Abstract
The study empirically investigate the nexus between agricultural financing
and economic growth in Nigeria from 1983 to 2015. Augmented Dickey-Fuller
(ADF) test and the Phillip-Perron tests were used to establish which variable is
stationary at different levels. Almost all the variables (Real Gross Domestic Product
(RGDP) Agricultural credit guarantee scheme fund (ACGSF) Commercial Bank
Loan and Advance on Agriculture (CBLAA) are stationary at first different form,
that is they are integrated of order I (1) except interest rate (INTR) which is
stationary at level, that is, it is integrated of order I (0), hence Bounds co-integration
test was adopted since it allows combination of fractionally integrated variables i.e.
combines variables of different orders of integration. The results reveal existence of
long-run relationship between proxy of economic growth and the proxies of
agricultural financing. Meanwhile, Auto Redistributed Lag (ARDL) results show
both short and long run effect of agricultural financing schemes on the growth of
Nigerian economy. In addition, various diagnostic tests (such as Jarque-Bera (JB)
test, Breusch-Pagan Serial Correlation (LM) test, Ramsey test, and ARCH test) were
conducted to fulfill some of both Ordinary Least Square and normality assumptions.
Notably, the loan disbursement mechanism adopted by agricultural credit institutions
have fail to drive the Nigerian economy towards real growth despite the long run
nexus among the key variables, coupled with corruption, and policy summersaults in
the sector. Therefore, there is need for proper channelization of loans across board
with sustainable fiscal measures that can translate to actual growth.