ABSTRACT
This research work
examined the impact of commercial Bank credit on Agricultural output in
Macroeconomic variables (commercial bank credit and agricultural output). The
broad objective of the study is to investigate the extent to which commercial
bank credit had supported agricultural output
are: (i) to determine the impact of commercial banks credit on agricultural
output in
and (i) to determine the impact of agricultural output on economic growth in
methodology adopted for the study was
ordinary least square (OLs) involving the student’s T-test, to test the significance of the individual parameter estimate, the
F-test, to test the significance of the entire regression plane, the R2
and Adjusted R2, to test the joint influence of the explanatory
variables on the dependent variable. Finally, Durbin-Watson’s statistics (DW)
was used to check the presence or absence of serial correlation on the data. After the regression, the result shows that:
firstly, agricultural output as well as commercial bank credit to agriculture
and real interest rate contributed a lot to economic growth in
Secondly there is a general agreement that
grossly underfunded. Finally, the share
of actual expenditure that went to the agricultural sector compared unfavorable
with the shares that went to other sectors. Based on the findings above, the
researcher made the flowing suggestions:
There is the need for improvement of public expenditure
tracking system in agricultural sector.
There is also the
need for clarification of the roles of the three tiers of government in
agricultural services delivery.
There is the need for
applied research targeted at priority issues
TABLE OF CONTENTS
TITLE PAGE……………………………………………………………..i
APPROVAL PAGE………………………………………………………ii
DEDICATION…………………………………………………………….iii
ACKNOWLEDGEMENT…………………………………………………iv
ABSTRACT………………………………………………………………..vi
TABLE OF CONTENT……………………………………………………viii
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND
TO THE STUDY……………………………………….1
1.2 STATEMENT
OF PROBLEM…………………..………………………..6
1.3 OBJECTIVE
OF THE STUDY…………………………….…………..…9
1.4 HYPOTHESIS
OF THE STUDY…………………………………………9
1.5 SIGNIFICANCE
OF THE STUDY…………………….………………..10
1.6 SCOPE
AND LIMITATION OF HE STUDY…………………………..10
CHAPTER
TWO
REVIEW
OF RELATED LITERATURE
2.1 THEORITICAL L ITERATURE……………………………….……….12
2.1.1
THE PRE-REQUISITE THESIS VERSUS
THE
CONCURRENCE THESIS……………………………………….14
2.2 FINANCING AGRICULTURE IN
2.1.1 SOURCES OF AGRICULTURAL FINANCING
…………………….20
2.3 COMMERCIAL BANK CREDIT AND AGRICULTURAL
OUTPUT………………………………………………………………... 23
2.4 EMPIRICAL LITERATURE……………………………………………..28
CHAPTER
THREE
RESEARCH
METHODOLOGY
3.1 MODEL SPECIFICATION …………………………………….……….34
3.2 ESTIMATION PROCEDURE………………..…………………………36
3.3 EVALUATION TECHNIQUES………..………………………………..37
3.4 DATA REQUIRED AND SOURCES…………………………………..41
CHAPTER
FOUR
DATA
PRESENTATION AND ANALYSIS
4.1 UNIT ROOT TEST………………………………………………………43
4.2 CO INTEGRATION TEST………………………………………………44
4.3 PRESENTATION AND INTERPRESTATION OF RESULT………..46
4.3:1 INTERPRESTATION OF REGRSSION RESULT…………..………..47
4.4 EVALUATION OF EMPIRICAL RESULT……………………………..48
4.4:1 ECONOMIC CRITERIA (A
PRIORI EXPECTATION)……………....48
4.4:2 STATISTICAL
CRITERIA……………………………………………..50
4.4:3 COEFFICIENT OF
DETERMINATION (R2)………………………….51
4.4.4 THE
T-STAISTICS……………………………………………………..51
4.4.5 THE
F-TEST…………………………………………………………….52
4.5. ECONOMIC CRITERIA
(SECOND ORDER TEST)…………………53
CHAPTER
FIVE
SUMMARY,
CONCLUSION AND RECOMMENDATION
5.1 SUMMARY……………………………………………..……………..… 59
5.2 CONCLUSION …………………………………………………………..62
5.3 RECOMMENDATION………………………………………..………….63
BIBLIOGRAPHY……………………………………………….…………67
APPENDIX
CHAPTER ONE
1.1 BACKGROUND
TO THE STUDY
As
confirmed by Ugochukwu (1999:02), agriculture is the first and most thriven
occupation of mankind. From its early form of wild fruits, leaf, root, snail
and insect gathering, fishing and hunting, to its present mechanized and almost
automated form, it has undergone a lot of development
Okah (2007:04) conceived agriculture
as the cultivation of land, raising animals for the purpose of production of
food for man, feed for animals, and raw materials for our industries. It also
consist of croup production, forestry, livestock and fishing. It is also
essential for expansion of employment opportunity, reduction of poverty and
improvement of income distribution, speeding up industrialization and easing
the pressure of balance of payments disequilibrium.
The role of agriculture in transforming
both the social and economic frame work of an economy cannot be over emphasized.
Anyanwu (1997:213) posits that “agriculture has been the main source of gainful
employment from which
nation can feed its feeding population, providing the nations industries with
local raw materials and as a reliable source of government revenue.
Corroborating the above is Reynolds(1975.35) who asserts that agricultural
development can promote the economic development by increasing the supply of
food available for domestic consumption and releasing the labour needed for
industrial employment.
The major agricultural export
commodities in Nigeria include cocoa, coffee, cotton, groundnut, groundnut oil,
palm kernel, soya beans, ginger rubber, benign –seed and chili pepper
(CBN,2003).there are other commodities that are being demanded in the world
market such as cassava and cassava products, banana, plantain and so on. The
Nigerian economy until today is still dependent on primary products both as
foreign exchange earner and contribute to gross domestic product.(GAP).
Olurosunsola (1996:131) attributes this to the fact that the main interest of
the colonial masters was and still is the exportation of products needed for
their home industries.
The continuous production and exports
of the agricultural product played a dominant role in attracting foreign
exchange to boost economic activities from independence to the early 1970s.
Obadan (2000:68), observes that the production and palm oil accounted for 96.4%
of total exports earnings while non- oil export product accounted for 97.3% for
total export then. He observed further that from the 1970s, the
Nigerian economy became mono-cultural, having been transformed from one
dependent on fairly diversified portfolio of agricultural products to an
economy heavily dependent on crude oil for growth and sustenance. Oyo (1994:23)
observed that the advent of crude petroleum production and related activities
especially in the early 1970’s changed radically the structure of
economy. The huge foreign exchange earnings from crude oil export encouraged
importation of finished foods to the detriment of domestic manufactured ones,
while the agricultural sector was rendered less competitive over time through
over-valued currency, inappropriate pricing policies and scarcity of farm
labour caused mainly by the migration of youth to urban areas in search of wage
employment.
two types, the subsistence agriculture and commercial agriculture-: the
subsistence agriculture is the type of farming which involves only the farmer
and his family i.e the farmer produces for himself and his family with little
or none to sell in the market it is practiced in small scale system. It
involves only a little amount of money to practice unlike commercial farming
that involves huge amount of money to practice. It does not involve the machine
to carry out, since the land is very small and fragmented (Amechi 2004).
The second type is commercial
agriculture, and this is where a farmer produces his crops and sells them in
the market. It is carried out in large scale with enough land and machines.
These machines are used in cultivating crops. It involves a lot of capital and
time, and also increase the farmers income. Commercial farming helps farmers
to
engage in the cultivation of different varieties of crops, since the money,
land and equipment could easily be used.
In agriculture, fund is needed to enable
the farmer purchase more land, buy his inputs at the appropriate time and to
pay for hired labour or farm machinery. Unfortunately, credits are not easily available
for most of the farmers because of collateral and other things that are usually
required by the commercial banks and other credit institutions. This makes it
possible for most of the farmers in
capital for investment in large scale agriculture, hence the reason for the
recent low agricultural productivity.
With
the recent move by the leading economies of the world to diversify their
economy
in a
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