Institutional credit and agricultural production nexus

Maqbool Sial, Masood Awan () and Muhammad Waqas ()

MPRA Paper from University Library of Munich, Germany

Abstract: Credit plays an important role in the development of agriculture sector. It capitalizes farmers to adopt new technologies. It helps smooth consumption by providing Working capital and reduces poverty in the process. Both formal and informal lenders are active in rural credit market of Pakistan. There is a need to highlight the relationship between institutional agricultural credit and agricultural production. Time series data for the period of 1973-2009 was used. The study utilized Johansen and Juselius (JJ) cointegration approach and Granger causality test to explore the long-run equilibrium relationship and the possible direction of causality between availability of institutional agricultural credit, labor force availability, cropping intensity, water availability and agricultural production. Result shows the long run relationship among variables. Granger causality test shows the uni-directional causality among institutional agricultural credit and agricultural production and among water availability and agricultural production. The bi-directional causality was found among availability of labor force & cropping intensity and among water availability & cropping intensity.

Keywords: Institutional credit; Agricultural credit; Pakistan (search for similar items in EconPapers)
JEL-codes: A11 G0 O1 Q58 (search for similar items in EconPapers)
Date: 2011, Revised 2011
New Economics Papers: this item is included in nep-agr
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Citations: View citations in EconPapers (2)

Published in International Journal of Business and Social Science 13.2(2011): pp. 279-284

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:30932

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