EFFECT OF BANK CREDITS ON AGRICULTURAL OUTPUT: EVIDENCE FROM EDO STATE, NIGERIA

Abstract

This study investigated the effects of bank credits on agricultural output in Edo
State, Nigeria. Emphasis was laid on the credits of Deposit Money Banks, BOA (Bank of
Agriculture), and microfinance banks. The survey research design was adopted, and farmers from
Esan North-East, Esan Central, Esan South-East, Etsako West, Igueben, and Uhunmwonde Local
Government Areas (LGAs) of Edo State served as the unit of analysis. The stratified random
sampling technique was employed to determine the number of farmers included in the study. These
farmers were reached using questionnaires and personal interviews. The quantified version of the
collected data was subjected to descriptive analysis, correlation analysis, and joint and individual
tests at a 5% level of significance. Findings revealed that the credit of Deposit Money Banks has
a positive and significant effect on agricultural output, while the credit of the Bank of Agriculture
and microfinance banks has positive, but insignificant, effects on agricultural output. Hence, bank
credits have positive effects on agricultural output in Edo State, Nigeria. As such, to enhance the
output of the agricultural sector in Edo State, the government of the day should encourage deposit
money banks, BOA and microfinance banks to extend more credit to farmers in the state.
Nevertheless, measures should be put in place to ensure that farmers repay such loans as they
become due. Thus, all existing farmers in the state should be properly registered with the Ministry
of Agriculture so that their activities can be properly monitored, allowing the government to serve
as a guarantor for these farmers.