Banks are financial institution which can play an outstanding role between sustainable economic growth and environmental protection in order to prove themselves as environment friendly and socially accountable institution. For promoting this there is nothing but "Green Banking" which is the most talked topic in the recent banking activities and responsibilities. Green Banking refers to the banking business conducted in selected area and technique that helps the reduction of carbon emission surround the world. To aid the reduction of carbon emission bank should finance green technology and pollution reducing sectors. Green finance is an integral part of Green banking that makes a great contribution to the transition to resource-efficient and low carbon industries. Green Banking is certainly a new initiative throughout the world. The leading bankers and entrepreneurs have come forward to protect human being from environmental disasters. In the context of Bangladesh, if we think about it, we will find the situation to be terrible. Our people have little awareness about environment pollution and they do not understand the severe consequences of this pollution which will create an unexpected trouble in the coming decades.
In this study, the authors tried to identify the relationship between bank credit and agricultural output in Bangladesh. Simultaneously impact assessment of bank credit on agricultural output is also investigated. Different econometric techniques are used to determine the nature of the relationship between bank credit and agricultural output and the impact of bank credit. A total of 40 years (1981-2020) of annual time series data were collected from the Annual Reports of the Bangladesh Bank and World Bank’s world development indicators. Stationarity and cointegration tests were performed initially and then analyzed with Vector Error Correction Model, confirming a long-run relationship between bank credit and agricultural output. Additionally, univariate and multivariate OLS models are performed to identify the magnitude of bank credit’s impact on agricultural output. Both models revealed that bank credit positively and significantly affects agricultural production in Bangladesh. Based on these findings, the authors recommend additional fund allocation to the agricultural production system by the banks in Bangladesh.
Purpose. This study aimed to provide the central bank of Bangladesh with some empirical data on the impact of bank agricultural credit on agricultural output as a priority sector lending. Methodology / approach. Econometric analysis is applied to discover the nature of the relationship between banks’ agricultural credit and agricultural gross domestic product (GDP) and to find the impact of bank agricultural credit on agricultural output in Bangladesh. Data are extracted from secondary sources, i.e., Bangladesh Bank, Bangladesh Bureau of Statistics, World Bank, and Ministry of Finance for 1991 to 2018. Time-series data are analyzed using the Augmented Dickey–Fuller (ADF) unit root test and the Johansen cointegration test and later examined with Vector Error Correction Model (VECM). Results. The Augmented Dickey–Fuller unit root test confirmed that the variables were non-stationary at their level data and became stationary after taking their first difference value. Since the variables are integrated at I(1), we performed the Johansen Co-integration test. Subsequently, one co-integration equation was found, and Vector Error Correction Model estimation was done afterwards. According to the results of VECM estimation, bank agricultural credit, pesticide consumption, and use of cropped areas have long-run relation with agricultural output. Originality / scientific novelty. This study reveals the nature of relationship and assessment of the impact of bank credit on agricultural GDP with empirically valid techniques and tools. In this context, the data from Bangladesh remains very rare. Moreover, for those works which have been done in the context of Bangladesh, appropriate methods and techniques are not always inherent. Hence, this significant research gap is addressed in our present study. Thus, we expect that the findings of this study from Bangladesh based on empirically valid standard techniques can incrementally contribute to the existing literature. Practical value / implications. Findings of this research, can be used as an information basis by the central bank of Bangladesh. Based on the findings of this research, Bangladesh Bank should initiate new policies and programs regarding agricultural credit for the projected increase in agricultural GDP in Bangladesh.
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