Digital Finance and Agricultural Credit in Nigeria: An Econometric Analysis
DOI:
https://doi.org/10.56532/mjbem.v4i2.122Keywords:
Digital Finance Innovation, Agricultural Credit, ATM, POS, NigeriaAbstract
Digital financial innovations are increasingly viewed as mechanisms for improving credit access across economic sectors, particularly agriculture. However, empirical evidence on the effects of specific digital financial instruments on agricultural credit in Nigeria remains limited. This study examines the influence of Automated Teller Machines (ATM), Point of Sale (POS) systems, and web-based payment platforms (web-pay) on agricultural credit allocation by Deposit Money Banks (DMBs) in Nigeria from the first quarter of 2009 to the fourth quarter of 2021. Data were obtained from the Central Bank of Nigeria (CBN) Statistical Bulletin. The study employs Fully Modified Ordinary Least Squares (FMOLS), Dynamic Ordinary Least Squares (DOLS), and Canonical Cointegrating Regression (CCR), alongside Granger causality analysis, to investigate long-run relationships and causal dynamics. The findings confirm a long-run equilibrium relationship between digital financial transaction channels and agricultural credit. ATM and POS transactions exhibit positive and statistically significant effects on agricultural credit, with coefficients of 0.211665 and 0.067034 respectively. Conversely, web-pay transactions show a negative but statistically significant association with agricultural lending. Causality analysis reveals bidirectional relationships between ATM transactions and agricultural credit, as well as between POS transactions and agricultural credit, indicating mutual reinforcement. In contrast, a unidirectional causal flow is observed from agricultural credit to web-pay transactions. The results suggest that ATM and POS technologies are key drivers of agricultural credit distribution in Nigeria, while web-pay platforms play a limited role. The study recommends increased adoption of ATM and POS technologies by both agricultural stakeholders and DMBs, particularly in rural areas, to enhance financial inclusion, credit access, and agricultural productivity.
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