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Effects of Interest Rate Deregulation on Agricultural Financing in Nigeria from (1970 to 2014)

Abstract

Ugwuoke Chukwuchebe Obiajulu, Ume Chukwuma Otum and Ihedioha Nice Nneoma

The study of effects of interest rate deregulation on agricultural financing in Nigeria (1970-2014). The study also specifically examined the trend in the rate of interest, volume of credit to agricultural sector and agricultural GDP contribution under the period (1970-2014). The study employed descriptive/trend statistics, ordinary least square regression and correlation analysis to achieve its results. Secondary data used for the study were computed from CBN Statistical bulletin 2014. The results show that interest rate has a strong influence in the volume of credit to the agricultural sector and it also has weak influence on the agricultural GDP contribution. It was also observed that interest rate has been fluctuating under the period (1970-2014) that have resulted to low productivity, and unemployment in agricultural sector but makes the financial institutions to be willing to disburse credit to the public. The agricultural GDP contribution has a downward and upward trend during the period which is as a result of the neglect of the government based on the discovery of oil and lastly there was an upward trend in the volume of credit to the agricultural sector, which means funds were sent to the sector by government but because of bureaucratic processes most farmers are unable to access it.