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Agricultural credit guarantee scheme fund (ACGSF) and agricultural performance in Nigeria: A threshold regression analysis

Sulaimon, Mubaraq (2021): Agricultural credit guarantee scheme fund (ACGSF) and agricultural performance in Nigeria: A threshold regression analysis. Forthcoming in: CBN Journal of Applied Statistics

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Abstract

Credit financing deficit is one of the problems militating against the performance of agriculture in Nigeria. Against this background, the government of Nigeria introduced the agricultural credit guarantee scheme fund (ACGSF) in 1977 to encourage banks to increase and sustain lending to agriculture. Unfortunately, the scheme has not achieved the desired results. Hence, this study seeks to evaluate the thresholds of ACGSF on agricultural performance in Nigeria between 1981 and 2019. The performance of agriculture was captured using real agricultural Gross Domestic Product (GDP). Annual time series data were obtained from the Central Bank of Nigeria (CBN) Statistical Bulletin and the World Development Indicators (WDI) and analysed using threshold regression. Although insignificant, the results show U-shaped relationship between real agricultural GDP and ACGSF. In addition, ACGSF has significant positive effects on real agricultural GDP at 1060389 (₦’ thousand) and 5951809 (₦’ thousand) thresholds. The study concludes that sustain increase in the value of agricultural loans guaranteed and the inclusiveness of more smallholder farmers who dominate the Nigerian agricultural space will translate into robust contribution of the scheme to agricultural performance in Nigeria.

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