This study is an analysis of the effect of commercial banks’ credit to agriculture on the agricultural sector’s contribution to Nigerian real gross domestic product from 1986 to 2020. Specifically, this study ascertained the effect of commercial banks’ credit to agriculture, inflation rate and interest rate on the agricultural sector’s contribution to real gross domestic product. The Autoregressive Distributive Lag (ARDL) was the econometric tool of analysis employed using data sourced from the statistical bulletins of the Central Bank of Nigeria (CBN). The findings of this study in its totality unveiled statistically that commercial banks’ credit to agriculture does not affect the sector’s contribution to real gross domestic product. In the light of the findings, there is a critical need for commercial banks to increase loans to agricultural enterprises through a reduction in interest rate charge for agricultural purposes, which in turn permits for greater economic growth and development. The Central Bank of Nigeria can encourage this through a reduction in the monetary policy rate which inflicts the high interest rate charged by the commercial banks. The Central Bank of Nigeria can also appeal to the commercial banks to reduce their collateral requirements to encourage more farmers, especially the rural farmers to have access to finance for agricultural production.
banks credit; agricultural gross domestic product
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