Effect of bank credit on agricultural gross domestic product
Purpose. This study aimed to provide the central bank of Bangladesh with some empirical data on the impact of bank agricultural credit on agricultural output as a priority sector lending. Methodology / approach. Econometric analysis is applied to discover the nature of the relationship between b...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
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Institute of Eastern European Research and Consulting
2023-03-01
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| Series: | Agricultural and Resource Economics |
| Subjects: | |
| Online Access: | https://are-journal.com/are/article/view/639 |
| _version_ | 1797769901992050688 |
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| author | Md. Sazzad Hossain Patwary Md. Shahidul Islam Rana Al Mosharrafa |
| author_facet | Md. Sazzad Hossain Patwary Md. Shahidul Islam Rana Al Mosharrafa |
| author_sort | Md. Sazzad Hossain Patwary |
| collection | DOAJ |
| description | Purpose. This study aimed to provide the central bank of Bangladesh with some empirical data on the impact of bank agricultural credit on agricultural output as a priority sector lending.
Methodology / approach. Econometric analysis is applied to discover the nature of the relationship between banks’ agricultural credit and agricultural gross domestic product (GDP) and to find the impact of bank agricultural credit on agricultural output in Bangladesh. Data are extracted from secondary sources, i.e., Bangladesh Bank, Bangladesh Bureau of Statistics, World Bank, and Ministry of Finance for 1991 to 2018. Time-series data are analyzed using the Augmented Dickey–Fuller (ADF) unit root test and the Johansen cointegration test and later examined with Vector Error Correction Model (VECM).
Results. The Augmented Dickey–Fuller unit root test confirmed that the variables were non-stationary at their level data and became stationary after taking their first difference value. Since the variables are integrated at I(1), we performed the Johansen Co-integration test. Subsequently, one co-integration equation was found, and Vector Error Correction Model estimation was done afterwards. According to the results of VECM estimation, bank agricultural credit, pesticide consumption, and use of cropped areas have long-run relation with agricultural output.
Originality / scientific novelty. This study reveals the nature of relationship and assessment of the impact of bank credit on agricultural GDP with empirically valid techniques and tools. In this context, the data from Bangladesh remains very rare. Moreover, for those works which have been done in the context of Bangladesh, appropriate methods and techniques are not always inherent. Hence, this significant research gap is addressed in our present study. Thus, we expect that the findings of this study from Bangladesh based on empirically valid standard techniques can incrementally contribute to the existing literature.
Practical value / implications. Findings of this research, can be used as an information basis by the central bank of Bangladesh. Based on the findings of this research, Bangladesh Bank should initiate new policies and programs regarding agricultural credit for the projected increase in agricultural GDP in Bangladesh. |
| first_indexed | 2024-03-12T21:15:44Z |
| format | Article |
| id | doaj.art-4278eeb9545f49d5a6d11a64867f5e4f |
| institution | Directory Open Access Journal |
| issn | 2414-584X |
| language | English |
| last_indexed | 2024-03-12T21:15:44Z |
| publishDate | 2023-03-01 |
| publisher | Institute of Eastern European Research and Consulting |
| record_format | Article |
| series | Agricultural and Resource Economics |
| spelling | doaj.art-4278eeb9545f49d5a6d11a64867f5e4f2023-07-29T12:29:52ZengInstitute of Eastern European Research and ConsultingAgricultural and Resource Economics2414-584X2023-03-019118820410.51599/are.2023.09.01.09639Effect of bank credit on agricultural gross domestic productMd. Sazzad Hossain Patwary0Md. Shahidul Islam1Rana Al Mosharrafa2Begum Rokeya UniversityUniversity of DhakaPrime UniversityPurpose. This study aimed to provide the central bank of Bangladesh with some empirical data on the impact of bank agricultural credit on agricultural output as a priority sector lending. Methodology / approach. Econometric analysis is applied to discover the nature of the relationship between banks’ agricultural credit and agricultural gross domestic product (GDP) and to find the impact of bank agricultural credit on agricultural output in Bangladesh. Data are extracted from secondary sources, i.e., Bangladesh Bank, Bangladesh Bureau of Statistics, World Bank, and Ministry of Finance for 1991 to 2018. Time-series data are analyzed using the Augmented Dickey–Fuller (ADF) unit root test and the Johansen cointegration test and later examined with Vector Error Correction Model (VECM). Results. The Augmented Dickey–Fuller unit root test confirmed that the variables were non-stationary at their level data and became stationary after taking their first difference value. Since the variables are integrated at I(1), we performed the Johansen Co-integration test. Subsequently, one co-integration equation was found, and Vector Error Correction Model estimation was done afterwards. According to the results of VECM estimation, bank agricultural credit, pesticide consumption, and use of cropped areas have long-run relation with agricultural output. Originality / scientific novelty. This study reveals the nature of relationship and assessment of the impact of bank credit on agricultural GDP with empirically valid techniques and tools. In this context, the data from Bangladesh remains very rare. Moreover, for those works which have been done in the context of Bangladesh, appropriate methods and techniques are not always inherent. Hence, this significant research gap is addressed in our present study. Thus, we expect that the findings of this study from Bangladesh based on empirically valid standard techniques can incrementally contribute to the existing literature. Practical value / implications. Findings of this research, can be used as an information basis by the central bank of Bangladesh. Based on the findings of this research, Bangladesh Bank should initiate new policies and programs regarding agricultural credit for the projected increase in agricultural GDP in Bangladesh.https://are-journal.com/are/article/view/639agricultural gdpagricultural creditbank creditagricultural productionvecmbangladesh. |
| spellingShingle | Md. Sazzad Hossain Patwary Md. Shahidul Islam Rana Al Mosharrafa Effect of bank credit on agricultural gross domestic product Agricultural and Resource Economics agricultural gdp agricultural credit bank credit agricultural production vecm bangladesh. |
| title | Effect of bank credit on agricultural gross domestic product |
| title_full | Effect of bank credit on agricultural gross domestic product |
| title_fullStr | Effect of bank credit on agricultural gross domestic product |
| title_full_unstemmed | Effect of bank credit on agricultural gross domestic product |
| title_short | Effect of bank credit on agricultural gross domestic product |
| title_sort | effect of bank credit on agricultural gross domestic product |
| topic | agricultural gdp agricultural credit bank credit agricultural production vecm bangladesh. |
| url | https://are-journal.com/are/article/view/639 |
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