Bank Credit and Agricultural Output in Nigeria

Abstract 
This study examines bank credit and 
agricultural output in Nigeria from 1985-2024. 
The objectives of the study are to; determine 
the impact of deposit money banks’ loans and 
advances (DMBLA), interest rate (INTR), and 
government agricultural expenditure (GAX) 
on agricultural output (AGQ) in Nigeria from 
1985–2024. Secondary data were obtained 
from the Central Bank of Nigeria (CBN) 
Statistical Bulletin and the Ordinary Least 
Squares (OLS) multiple regression technique 
was employed for estimation. The results 
reveal that, DMBLA exerted indirect and 
statistically not significant impact on 
agricultural output, indicating that, bank credit 
to agriculture has not translated into 
substantial productivity gains. Similarly, INTR 
showed a negative but insignificant 
relationship with AGQ, suggesting that, high 
lending rates discouraged credit uptake 
without significantly influencing output. In 
contrast, GAX had direct and substantial 
impact on AGQ, highlighting the crucial role 
of public investment in driving agricultural 
growth. The model recorded R² value of 0.721, 
suggesting that, about 72% of variations in 
agricultural output were explained by the 
independent variables. The study recommends 
reforms in agricultural credit delivery, interest 
rate adjustments, targeted government 
spending, and stronger public–private 
collaboration to improve credit efficiency and 
foster sustainable growth in the Nigerian 
agricultural sector.