Does Institutional Quality Shape Agricultural Credit Orientation? Evidence from D-8 Nations

Ömer Keskin, Batuhan Medetoğlu, Yusuf Bahadır Kavas and Musa Gün ()
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Ömer Keskin: Özalp Vocational School, Van Yüzüncü Yıl University, Van 65080, Türkiye
Batuhan Medetoğlu: Ağlasun Vocational School, Burdur Mehmet Akif Ersoy University, Burdur 15800, Türkiye
Yusuf Bahadır Kavas: Merzifon Vocational School, Amasya University, Amasya 05300, Türkiye
Musa Gün: Faculty of Economics and Administrative Sciences, Recep Tayyip Erdoğan University, Rize 53100, Türkiye

Agriculture, 2025, vol. 15, issue 18, 1-27

Abstract: The agricultural sector, which has long been overshadowed by industrialization, has reemerged with renewed strategic significance in the face of global crises, including pandemics and armed conflicts. This study examines the causal relationship between institutional quality and agricultural credit orientation in the Developing-Eight countries from 2002 to 2023. Using the agriculture orientation index for credit as a key indicator, this study investigates how disaggregated institutional dimensions—control of corruption, government effectiveness, political stability and absence of violence, rule of law, regulatory quality, and voice and accountability—affect the allocation of commercial bank credit to agriculture. Both the standard Kónya panel causality test and its time-varying extension are employed to capture static and dynamic causal patterns. The findings demonstrate that institutional quality exerts a substantial effect on credit orientation, although the magnitude and characteristics of this influence differ across countries. Türkiye, Indonesia, Nigeria, and Egypt exhibit consistent causal relationships, whereas other countries reveal episodic or latent effects linked to specific political or legal shifts. By combining dynamic methodology with a policy-relevant indicator, this study offers novel insights into how governance shapes agricultural finance. The results underscore the need for country-specific and institution-sensitive credit strategies to increase resilience and equity in financial systems.

Keywords: agricultural finance; agriculture orientation index for credit; institutional quality components; causality analysis (search for similar items in EconPapers)
JEL-codes: Q1 Q10 Q11 Q12 Q13 Q14 Q15 Q16 Q17 Q18 (search for similar items in EconPapers)
Date: 2025
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