Abstract
Access to formal agricultural finance remains a major constraint to increasing agricultural productivity in Nigeria despite numerous government credit interventions. This study examined the effect of commercial bank credit on agricultural production in Nigeria using annual time-series data from 1991 to 2023. Specifically, the study evaluated the trend and growth patterns of agricultural production and credit to agriculture, estimated their short- and long-run relationships, and examined the causal relationship between the two variables. Secondary data were obtained from the Central Bank of Nigeria (CBN), the Food and Agriculture Organization (FAO), and the National Bureau of Statistics (NBS). Trend analysis, compound growth estimation, the Autoregressive Distributed Lag (ARDL) model, and Granger causality techniques were employed. The results showed significant positive trends in agricultural production and commercial bank credit, with compound growth rates of 21.04% and 2.84%, respectively. The ARDL bounds test confirmed a long-run relationship among the variables (F-statistic = 7.133). In the long run, commercial bank credit exerted a significant negative effect on agricultural production (β = −0.427, p < 0.01), whereas government expenditure on agriculture positively influenced output and higher interest rates reduced production. In the short run, lagged commercial bank credit significantly enhanced agricultural production, while the error correction coefficient (−1.470, p < 0.01) indicated rapid adjustment toward long-run equilibrium. Granger causality results revealed no causal relationship between commercial bank credit and agricultural production. The study concludes that expanding agricultural credit alone is insufficient to sustain agricultural growth and recommends improving credit efficiency, strengthening agricultural investment, and providing complementary institutional and infrastructural support.