ANALYSIS OF FACTORS AFFECTING THE SUPPLY OF COMMERCIAL BANKS CREDIT TO THE AGRICULTURAL SECTOR IN NIGERIA (1986-2005)

This paper is on the supply of commercial banks credit to the agricultural sector in Nigeria from 1986 to 2005. Time series published data collected include agricultural GDP, commercial banks agricultural credit, cash reserve ratio and commercial banks lending rate. A multiple regression analysis approach involving the use of ordinary least (OLS) estimation techniques was adopted. Repayment ability of agricultural sector has a positive and significant effect on commercial banks credit supply to agriculture while lending rate has a positive and insignificant effect on banks agricultural credit supply. Cash reserve ratio has a negative and significant effect on commercial banks agricultural credit supply. Commercial bank agricultural credit supply is inelastic with respect to all the explanatory variables. Productivity in agricultural sector should be increased to attract commercial banks credit. Cash reserve ratio should be reduced to empower commercial banks to lend to agriculture