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Institutional credit and agricultural production nexus

Author

Listed:
  • Sial, Maqbool Hussain
  • Awan, Masood Sarwar
  • Waqas, Muhammad

Abstract

Credit plays an important role in the development of agriculture sector. It capitalizes farmers to adopt new technologies. It helps smooth consumption by providing Working capital and reduces poverty in the process. Both formal and informal lenders are active in rural credit market of Pakistan. There is a need to highlight the relationship between institutional agricultural credit and agricultural production. Time series data for the period of 1973-2009 was used. The study utilized Johansen and Juselius (JJ) cointegration approach and Granger causality test to explore the long-run equilibrium relationship and the possible direction of causality between availability of institutional agricultural credit, labor force availability, cropping intensity, water availability and agricultural production. Result shows the long run relationship among variables. Granger causality test shows the uni-directional causality among institutional agricultural credit and agricultural production and among water availability and agricultural production. The bi-directional causality was found among availability of labor force & cropping intensity and among water availability & cropping intensity.

Suggested Citation

  • Sial, Maqbool Hussain & Awan, Masood Sarwar & Waqas, Muhammad, 2011. "Institutional credit and agricultural production nexus," MPRA Paper 30932, University Library of Munich, Germany, revised 2011.
  • Handle: RePEc:pra:mprapa:30932
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    File URL: https://mpra.ub.uni-muenchen.de/30932/1/MPRA_paper_30932.pdf
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    References listed on IDEAS

    as
    1. Habib A. Zuberi, 1989. "Production Function, Institutional Credit and Agricultural Development in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 28(1), pages 43-56.
    2. 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.
    3. Sarfraz Khan Qureshi & Akhtiar H. Shah, 1992. "A Critical Review of Rural Credit Policy in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 31(4), pages 781-801.
    4. Sial, Maqbool Hussain & Awan, Masood Sarwar & Waqas, Muhammad, 2011. "Role of Institutional Credit on Agricultural Production: A Time Series Analysis of Pakistan," MPRA Paper 31815, University Library of Munich, Germany.
    5. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Institutional credit; Agricultural credit; Pakistan;

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • G0 - Financial Economics - - General
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists

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