Impact of credit disbursed by commercial banks on the productivity of wheat in Faisalabad district

Abstract

Purpose

The agriculture sector is the single largest contributor to the national income (gross domestic product – (GDP)) of Pakistan. Wheat is the main staple diet of the people of Pakistan. It contributes 13.7 percent to the value added in agriculture and 3.0 percent to GDP. Given its importance to the national economy, the government attaches high priority to raising agricultural productivity and farmer's income. For this purpose, financing for agricultural sector is very much needed and important. Like other institutional sources, commercial banks also provide agricultural credit. The purpose of this paper is to study the impact of credit disbursed by them on the productivity of wheat.

Design/methodology/approach

Primary data were collected from 114 randomly selected respondents through a well‐structured interview schedule. Cobb Douglous function was used to calculate the impact of credit on the productivity.

Findings

The coefficient of credit was highly significant, which showed that credit has a positive impact on the productivity of wheat and hence is an important tool for improving the productivity of agriculture sector.

Originality/value

The study in hand will be useful for the planners who are responsible for allocating funds for the agricultural sector in general and for wheat growers in particular. The recommendations of the study will go a long way to mitigating the problems being faced by the small farmers of Pakistan in securing institutional credit.

Citation

Khalid Bashir, M., Gill, Z.A. and Hassan, S. (2009), "Impact of credit disbursed by commercial banks on the productivity of wheat in Faisalabad district", China Agricultural Economic Review, Vol. 1 No. 3, pp. 275-282. https://doi.org/10.1108/17561370910958855