ROLE OF COMMERCIAL BANKING IN AGRICULTURAL DEVELOPMEMT IN NIGERIA

Abstract

The study examines the role of commercial banks in Agricultural development in Nigeria, spanning from 1986-2010. The study used Ordinary Least Squares (OLS) techniques for analyzing the findings, from the study, support the view that commercial bank loans do not reach real farmers. Commercial banks loan to the Agricultural sector has a positive growth and significant at 5% level, contributing 67.65 percent variations in Real Agricultural output in Nigeria. Real interest rate and real exchange rate are both having positive growth, but not significant at 5% percent level. The positive real interest rate shows that Investments in Agricultural sector in Nigeria has a very high rate of return. The findings suggest that real interest and exchange rates should be properly managed and periodically reviewed so as to promote the growth of the Agricultural sector.