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The Impact of Agricultural Credit on the Growth of the Agricultural Sector in Angola

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  • Mario Augusto Caetano Joao

    (Department of Economics, Faculty of Economics and Management, Czech University of Life Sciences in Prague, 165 00 Prague, Czech Republic)

  • Abreu Monteiro de Castro

    (Department of Economics, Faculty of Economics and Management, Angola Catholic University in Luanda, Luanda 2064, Angola)

Abstract

The ultimate goal of this paper was to examine the degree of elasticity between two variables, namely, agricultural credit and agricultural growth, in Angola in the period 2003–2022. Time series data were fitted into the ARDL test using various econometric techniques such as the ADF stationarity test, the Granger causality test, and the ordinary least squares method as well as a vector error correction model (VECM) to analyze the relationship between agricultural credit and agricultural economic growth, showing a causal relationship. Both the impacts through elasticities and the optimal point existing in this relationship were estimated. It was concluded that the impact of agricultural credit on agricultural GDP was 14.41%. The Granger causality test showed signs of a positive linkage between agricultural credit and agricultural GDP. However, there is a causal relationship between agricultural credit and agricultural GDP, in a unidirectional aspect. This result is consistent with most of the earlier studies reviewed in the literature, confirming that credit-oriented monetary policies can boost economic growth and, consequently, development in Angola. It is important for agricultural credit systems to be designed in a way that ensures equitable access, fair interest rates, and appropriate risk management mechanisms. Additionally, monitoring and evaluation mechanisms should be in place to assess the environmental and social impacts of credit programs on agricultural sustainability. It is worth noting that this is a first-of-its-kind study on the matter of the Angolan credit experience, specifically for the agricultural sector. Angola is still searching for a sustainable credit model that could be used as a catalyzer to boost growth and contribute to economic development.

Suggested Citation

  • Mario Augusto Caetano Joao & Abreu Monteiro de Castro, 2023. "The Impact of Agricultural Credit on the Growth of the Agricultural Sector in Angola," Sustainability, MDPI, vol. 15(20), pages 1-14, October.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:20:p:14704-:d:1256998
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    References listed on IDEAS

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    1. Barbara Pistoresi & Valeria Venturelli, 2012. "Credit, Venture Capital And Regional Economic Growth," Department of Economics 0680, University of Modena and Reggio E., Faculty of Economics "Marco Biagi".
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    3. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    4. Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-1072, June.
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