Agro-industrialisation and financial intermediation in Nigeria
African Journal of Economic and Management Studies
ISSN: 2040-0705
Article publication date: 24 April 2020
Issue publication date: 28 September 2020
Abstract
Purpose
The study aims to analyse the role of finance in the agro-industrialisation nexus in Nigeria using annual data on manufacturing value added, agricultural value added and volume of finance availed to the agricultural sector from 1981 to 2015.
Design/methodology/approach
To establish the presence of a long-run relationship, the error correction model and bounds cointegration techniques are employed. Likewise, the model is augmented to test whether the associated relationship between industrial output and agricultural output depends on access to finance by farmers with the inclusion of an interaction term.
Findings
Some salient contributions to the literature are as follows: agriculture and finance are strong and positive predictors of industrialisation in the long run; in the short run, past realisations of industrial output and finance have significant asymmetric effects on industrial output; the explanatory power of agriculture decreases with the growth of the financial system; and the long-run results validate the role of finance in the agro-industrialisation nexus.
Originality/value
Given these findings, achieving growth in the agricultural sector that will induce desired industrialisation should be prioritised by the government through agencies such as the central bank, financial intermediaries and other stakeholders with a view to making agricultural financing a major concern for sustainable domestic consumption and industrial growth.
Keywords
Citation
Adeleye, N., Osabuohien, E. and Asongu, S. (2020), "Agro-industrialisation and financial intermediation in Nigeria", African Journal of Economic and Management Studies, Vol. 11 No. 3, pp. 443-456. https://doi.org/10.1108/AJEMS-02-2019-0078
Publisher
:Emerald Publishing Limited
Copyright © 2020, Emerald Publishing Limited