COMMERCIAL BANKS’ LOANS TO AGRICULTURAL SECTOR AND FOOD SECURITY IN NIGERIA (1981-2024)

The study investigated commercial banks' loans to agricultural sector and food security in Nigeria (1981-2024) using secondary data from Central Bank of Nigeria Statistical Bulletin World Development Indicator (WDI), and National Bureau of Statistics (NBS). The objectives of this study were to describe the trends of commercial banks' loans to agricultural sector and food security in Nigeria, determined the impact of commercial banks' loans to agricultural sector and food security in Nigeria and causal relationship between commercial banks' loans to agricultural sector and food security in Nigeria. Unit root test was carried out with the use of Augmented Dickey Fuller to ascertain the stationarity of the variables and they were found to be stationary at order I (0) and I (1). ARDL (Autoregressive distributed lag) bound test was used to analyze and determined the model, as there existed a long run co-integration among the variables. The Granger Causality test was used to test for the causality among the variables in the model as well as checked the direction of causality among variables. The VECM result implies that 69% of the disequilibrium in a given year is corrected in the subsequent year and the magnitude of this coefficient suggests that the adjustment of disequilibria towards long-run equilibrium via the correction term is rather significant. This R2 value implies that about 99% of the total variation in the value of agricultural sector output (proxy for food security) is explained by changes in the explanatory variables (CBLA, INTR, MS, ACGSF, GEA). The result shows that Granger Causality revealed that there was a uni-directional causality between between money supply and agricultural sector output, between agricultural sector output (as proxy for food security) and government expenditure on agriculture, between money supply and the commercial bank loans, between government expenditure on agriculture and the commercial bank loans, and between money supply and government expenditure on agriculture. The study therefore concluded that interest rate, money supply at lag 1, and government expenditure were the factors that influenced food security in Nigeria within the period under review. The study therefore recommends that a substantial amount of government expenditure should be channeled effectively to the agricultural sector for the enhancement of food security.