Towards Climate-Resilient Agricultural Growth in Nigeria: Can the Current Cash Reserve Ratio Help?

Amara Priscilia Ozoji (), Chika Anastesia Anisiuba, Chinwe Ada Olelewe, Imaobong Judith Nnam, Chidiebere Nnamani, Ngozi Mabel Nwekwo, Arinze Reminus Odoh and Geoffrey Ndubuisi Udefi
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Amara Priscilia Ozoji: Department of Accountancy, Faculty of Business Administration, University of Nigeria, Enugu Campus, Enugu 400006, Nigeria
Chika Anastesia Anisiuba: Department of Accountancy, Faculty of Business Administration, University of Nigeria, Enugu Campus, Enugu 400006, Nigeria
Chinwe Ada Olelewe: Department of Banking and Finance, Faculty of Business Administration, University of Nigeria, Enugu Campus, Enugu 400006, Nigeria
Imaobong Judith Nnam: Department of Accountancy, Faculty of Business Administration, University of Nigeria, Enugu Campus, Enugu 400006, Nigeria
Chidiebere Nnamani: Department of Accountancy, Faculty of Business Administration, University of Nigeria, Enugu Campus, Enugu 400006, Nigeria
Ngozi Mabel Nwekwo: Department of Accountancy, Faculty of Business Administration, University of Nigeria, Enugu Campus, Enugu 400006, Nigeria
Arinze Reminus Odoh: Department of Accountancy, Faculty of Business Administration, University of Nigeria, Enugu Campus, Enugu 400006, Nigeria
Geoffrey Ndubuisi Udefi: Department of Accountancy, Faculty of Management Sciences, Alex Ekwueme Federal University, Ndufu-Alike, Abakaliki 480251, Nigeria

Sustainability, 2025, vol. 17, issue 13, 1-28

Abstract: The ability of the agriculture sector, which is exposed to climate hazards, to cope with climate challenges and to strive in spite of them, is conceptualized as the resilience of agriculture. In enhancing climate-resilient agriculture, the cash reserve ratio (CRR) is generally perceived to serve two crucial functions: first, encouraging banks to allocate credit to agriculturalists for climate-resilient agricultural practices; second, enhancing agriculturalists’ ability to sustain agricultural output growth in spite of climate crises. In light of this, we conducted an ex post evaluation of the effect of the currently in-use CRR on bank loans to climate-challenged Nigeria’s agriculture sector for climate-resilient agricultural practices. Additionally, this study investigates the CRR’s impact(s) on agricultural output growth amidst climate challenges. Other additional independent variables include monetary policy rate, government capital expenditures on agriculture, and government recurrent expenditures on agriculture, as well as temperature, precipitation, and the renewable energy supply. Using annual data from 1990 to 2022, the results from an autoregressive, distributed lag approach suggest that the standard CRR stipulated by the Central Bank of Nigeria in the present era of climate change cannot entirely sustain climate-resilient agriculture, evident in the present study’s discoveries on its inability to perform its two major functions (credit and growth) in enhancing agricultural resilience. These findings highlight the need for the green differentiation of the CRR to ensure its effective utilization in enhancing climate resilience.

Keywords: climate-resilient agricultural growth; cash reserve ratio; green-differentiated reserve requirements; banks’ credit allocation; agricultural output growth; Nigeria (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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