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Impact of Agricultural Credit on Agricultural Production: Evidence from Bangladesh

Author

Listed:
  • Azad, Abul Kalam
  • Choudhury, Nayeema Nusrat
  • Wadood, Syed Naimul

Abstract

This article aims to portray the impact of agricultural credit on agricultural production in Bangladesh using the Johansen co-integration method. However, the Johansen co-integration test requires the concerned variables to be in the same order of integration. Augmented Dickey-Fuller (ADF), Phillips Perron (PP), and Kwiatkowski, Phillips, Schmidt and Shin (KPSS) tests have been performed to check whether the variables contain a unit root. ADF, PP, and KPSS tests suggest that all variables- the natural logarithm of agricultural production, agricultural credit, fertiliser use, and agricultural employment- follow the integration of order one. The test results show that credit disbursed in agriculture and fertiliser usage significantly increase agricultural production in the long run. Nonetheless, the findings disclose that agricultural employment has a negative long-run effect on agriculture production. Regarding post-estimation, we did not find any serial correlation in the Vector Error Correction Model (VECM) model, and residuals of the VECM model are also normally distributed. Our findings suggest that credit disbursed in the agricultural sector facilities needs to be augmented to increase and sustain agricultural output.

Suggested Citation

  • Azad, Abul Kalam & Choudhury, Nayeema Nusrat & Wadood, Syed Naimul, 2022. "Impact of Agricultural Credit on Agricultural Production: Evidence from Bangladesh," MPRA Paper 118990, University Library of Munich, Germany, revised 2021.
    • Handle: RePEc:pra:mprapa:118990
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    References listed on IDEAS

    as
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    6. Marup Hossain & Mohammad Abdul Malek & Md Amzad Hossain & Md Hasib Reza & Md Shakil Ahmed, 2019. "Agricultural Microcredit for Tenant Farmers: Evidence from a Field Experiment in Bangladesh," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 101(3), pages 692-709.
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    More about this item

    Keywords

    Agricultural Credit; Agricultural Output; VECM Model; Bangladesh;
    All these keywords.

    JEL classification:

    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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