SOURCE:

Faculty: Management Sciences
Department: Banking And Finance

CONTRIBUTORS:

Ehiwele, P. I.
Ibenta, S. N.
Adigwe, P. K.

ABSTRACT:

This study is on the effect of Deposit Money Banks’ (DMBs) lending on Agricultural Production in Nigeria. . Extant studies have shown conflicting reports using data of 1970s to 1980s.The main objective is to empirically determine the effect of Deposit Money Banks’ lending on Agricultural Production (proxy by Agricultural Gross Domestic Product) in Nigeria. Secondary data were obtained from CBN Statistical bulletin, Annual Reports of CBN and Deposit Money Banks Annual Reports covering the period of 1995 to 2017. Data were presented in table while graph and histogram were used to determine the trend of agricultural production and explanatory variables. In conducting the analysis, multiple regression were employed to analyze data on such variables as Agricultural Gross Domestic Product (AGDP), Deposit Money Banks’ credit to Agriculture (DBCA), Deposit Money Banks’ total credit to Private Sector (DCPS), and Deposit Money Banks’ credit to small and medium Enterprises(DSME) sub-sector. The study is anchored on the endogenous growth theory. Hypotheses were carried out on assumption of the dependent and explanatory variables.DBCA, DCPS and DBTC have significant positive relationship with AGDP while DSME has positive relationship but not significant with AGDP. With the adjusted R2 of 0.979 showing that, the model explained over 97.9% of the variation in AGDP in 1995 to 2017. It is recommended thatDBCA and DBTC should be increased to boost agricultural production to the desired level. The regulatory framework as issued by CBN to support the agricultural sector should be adhered to. Following the outcome of the study, the findings of the study showed that a 1% increase in DBTC triggered a corresponding significant change in AGDP by up to46.5%, while a 1% increase in DCPS resulted to corresponding significant change in AGDP by up to 34%. We concluded that deposit Money Banks’ lending could boost agricultural production to the desired level.