Date of Graduation
Master of Science in International and Development Economics (MSIDEC)
College of Arts and Sciences
Global concern is rising about the performance of the agricultural sector in view of its integral role in poverty alleviation, economic development and meeting an ever-increasing nutritional demand. At the epicenter of the concern is declining productivity due to poor financial inclusion of the sector leading to low investment and returns to agriculture. A cursory examination of the existing literature on the subject reveals quite varied dimensions to the analysis of agriculture productivity-financial development nexus. Focusing on the role of financial sector development as a catalyst to agricultural productivity, we employ panel data and advances fixed-effects econometrics approach to empirically investigate the linkage between agricultural productivity and financial sector development. Results from the analysis suggests that while financial sector development contributes positively to agricultural productivity, the magnitude of the effect is however statistically insignificant. This result is robust to multiple specifications and controls for institutional quality, economic size, agro-environmental factors, level of infrastructure, human capital, as well as year and country fixed effects. Additionally, agriculture credit has a positive and significant effect on productivity across sample of 75 developing countries, but positive and insignificant for developed economies. In view of the foregoing, it is imperative that policies targeted at boosting agricultural productivity are predicated upon creating incentive system that channels greater credit to boost agricultural investment. In this sense, financial sector development is not an end itself, but a means to an end.
Onoja, John J., "Financial Sector Development and Agricultural Productivity" (2017). Master's Theses. 238.