Agriculture Credit and Economic Growth in Bangladesh: A Time Series Analysis

TL;DR

This study analyzes how agricultural credit influences Bangladesh's economic growth, revealing a positive long-term relationship and emphasizing policy support for increased credit to foster sustainable development.

Contribution

It employs Johansen cointegration and VECM techniques to establish a long-term link between agricultural credit and economic growth in Bangladesh.

Findings

Agricultural credit positively impacts GDP growth.

Gross capital formation has a positive effect.

Inflation negatively affects economic growth.

Abstract

The paper examined the impact of agricultural credit on economic growth in Bangladesh. The annual data of agriculture credit were collected from annual reports of the Bangladesh Bank and other data were collected from the world development indicator (WDI) of the World Bank. By employing Johansen cointegration test and vector error correction model (VECM), the study revealed that there exists a long run relationship between the variables. The results of the study showed that agriculture credit had a positive impact on GDP growth in Bangladesh. The study also found that gross capital formation had a positive, while inflation had a negative association with economic growth in Bangladesh. Therefore, the government and policymakers should continue their effort to increase the volume of agriculture credit to achieve sustainable economic growth.