Deposit Money Banks Loans and Advances and Agricultural Productivity in Nigeria: A Disaggregated Approach (1986 – 2021)

The proper functioning of the banking system is pivotal for the growth of agriculture. The rural sector is generally seen as very central to Nigerian’s development strategy, while agriculture continues to play a key role in rural growth. However, financial markets in Nigeria have continued to be too fragmented and urban biased, thereby being inadequate to meet the rural demands for its services thus the banking system is relied upon to finance productive activities in the country. This study ascertained the effect of deposit money banks loans and advances to agriculture on agricultural productivity in Nigeria over a period of thirty six years from 1986 to 2021. The study employed the traditional Ordinary Least Square (OLS) regression technique. The results of the analysis revealed that deposit money banks loans and advances to agriculture has no significant effect on crop production GDP, livestock GDP, and forestry GDP. The results of this study have shown the importance of agricultural financing in spurring economic growth and development in general. Taking into consideration the findings of this study, there is the critical need for deposit money banks to increase loans and advances to agricultural enterprises through reduction in interest rate charged, which in turn permits for greater economic growth and development. The management of deposit money banks should strengthen their policies on loans and advances and interest rates on such credits. Reliable, effective and efficient supervision, regulation and audit technique would lead to the actualization of this.