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Financial Stimulus And Performance of the Commercial Agricultural Credit Scheme (CACS) in Nigeria

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  • Olomola, A.

Abstract

This study sought to determine the impact of the financial capital intervention (stimulus to the banking sector) on credit flow to the agricultural sector using random-effects Tobit econometric technique and proffer suggestions for improved participation of the banking sector in agricultural financing in Nigeria. The results show that loan supply is higher for banks that are younger and bigger in size and that it is significantly higher under the commercial agricultural credit scheme (CACS) than before; implying that the financial stimulus have elicited significantly positive response from the commercial banks. Prior to CACS rising borrowers risk was associated with higher probability of loan supply whereas under CACS risk-taking by commercial banks has been moderated due to regulatory interventions by the CBN including intensive monitoring and enforcement of operational guidelines. Commercial banks do not increase agricultural lending due to higher leverage, greater liquidity and wider network of branches. They do so because of access to off-balance sheet resources. If their performance must increase as expected, public spending on infrastructural development must also increase. And to sustain the CACS, tapping alternative sources of funds such as the pension fund, accumulated funds in CACS repayment account, sugar levy account etc. is strongly recommended. Acknowledgement : Grateful acknowledgement is due to the International Food Policy Research Institute (IFPRI) for its financial support for this study. The administrative support of the Central Bank of Nigeria (CBN) in granting access to the required data is highly appreciated. In particular, I owe a debt of gratitude to the officials of the Development Finance Deparment of the CBN and Agricultural Finance Departments of the Deposit Money Banks for their cooperation during the data collection exercise for this study.

Suggested Citation

  • Olomola, A., 2018. "Financial Stimulus And Performance of the Commercial Agricultural Credit Scheme (CACS) in Nigeria," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277445, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae18:277445
    DOI: 10.22004/ag.econ.277445
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    References listed on IDEAS

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    Keywords

    Agricultural Finance;

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