The Impact of Monetary Policy on Agricultural output in Nigeria

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Brown, E. D., & Ajayi, E. J. (2015). The Impact of Monetary Policy on Agricultural output in Nigeria. Journal of Business Management and Economics, 3(11), 01–16. https://doi.org/10.15520/jbme.2015.vol3.iss11.155.pp01-16
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Abstract

The study examined the impact of monetary policy on  agriculturalouput in Nigeria. The  objective of this research is to determine  the  effect of money supply, prime lendingLow agricultural output has a negative effect on the economy as a whole, there is a low production of goods for food and raw materials for industries. A major challenge facing Nigeria is the inability to capture the financial services requirements of farmers andagribusiness owners who constitute about 70 percent of the population. Farmers needaccess to capital to purchase land and equipment and to invest in the development of new products, services, production technologies and marketing strategies. Yet banks are oftenreluctant to lend money to farmers for agricultural enterprises due to the lack of creditability and collateral. rate  and  deposit money  bank credit on the  index of agricultural output  in Nigeria. The study employed the time series data generated from central bank of Nigeria (CBN) and National bureau of statistics statistical bulletin. The study used the ordinary least square (OLS), the error correction method of co integration based on Engle Granger co integration theory and the Granger causality test. The E-view 7.1 econometric software was employed. The parsimonious correction results showed that the coefficient of determination is 0.559, the Durbin Watson value is 1.89 and f-statistics is 2.049 which is significant at 5%level. The results showed that the lag one and two forms of all the independent variables  which includes deposit money banks credit to the agricultural sector (CAGR), money supply (MSS) were rightly signed while interest rate (INTR) is negatively signed but were not significant.  The results showed that monetary policy does not impact significantly on the index of Agricultural output in Nigeria. The study recommends for reforms in the country monetary policy in order for it to significantly impact on the agricultural sector. Also, other policy must be complemented with monetary policy in order to improve agricultural output in Nigeria.

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