The nexus between agricultural production and agricultural loans for banking sector groups in Turkey

Abstract

PurposeThis study aims to determine the nexus between agricultural production and agricultural loans for the period Q1 2003–Q4 2018 in Turkey.Design/methodology/approachThe authors employ the time-series analyses within the scope of the study. Firstly, they run the Engle–Granger two-step cointegration test and the Toda–Yamamoto causality analysis. They also use the dynamic ordinary least squares (DOLS) model estimator and estimate the vector autoregression model for predicting the dynamic structure of time series.FindingsThe results of time series analyses reveal that the variables are cointegrated and there are causal relationships between agricultural loans and agricultural production. Also, the variance decomposition findings indicate that the effect of agricultural loans provided by development-investment banks and participation banks on agricultural production has increased over the years, and the deposit banks have a high impact on agricultural production. The results of the DOLS model indicate that agricultural loans have a positive effect on agricultural production.Originality/valueThis research is one of the few studies that comprehensively determines the direction of nexus between agricultural production and agricultural loans in Turkey economy. This is the first contribution of the study in the literature. Another contribution of this study is to investigate the nexus between agricultural production and agricultural loans for banking sector groups. Unlike other studies in the literature, this study calculates the variance decomposition by going beyond unit root and cointegration tests. Thus, this study has deep findings.

Impact of agricultural credit disbursement on cereals yield in Odisha

“…The current finding, cointegrating relationship between agricultural credit disbursements on cereal yield in Odisha, is a novel contribution to the agricultural credit and agricultural yield literature. A similar result is also previously evidenced in the studies of Osabohien et al (2019) and Osabohien, Adeleye et al (2020) for Nigeria, Kaya and Kadanalı (2021) for Turkey, Chandio et al (2021) for Pakistan and so on. The probable reasons for such findings are; first, providing agricultural loans can be seen as an investment in farming, leading to higher productivity and, in the end, higher yields (Chandio et al, 2018).…”

“…Though the findings of the above literature provide few insights on the impact of agricultural credit disbursement on agricultural yields, several shortcomings can be realized from the past studies. For instance, from the global perspective, several recent studies have reported the impact of agricultural credit on agricultural yields (Agbodji and Johnson, 2021;Chandio et al, 2021;Diallo et al, 2020;Kaya & Kadanalı, 2021;Miah et al, 2006;Osabohien et al, 2019;Wicaksono, 2014). However, any unarguable decision cannot be generalized to Odisha because country-specific attributes play a crucial role in the respective agricultural sectors.…”

“…In a study of Turkey over the period 2003Q1-2018Q4, Kaya and Kadanalı (2021) employed a dynamic ordinary least square estimator to investigate the impact of agricultural loans on agricultural production. Their study reported that agricultural production is positively affected by agricultural loans.…”

The impact of African agriculture production on bank stability through bank risk and profit

“…Increasing production levels requires either government intervention or investment policies (Babu & Akramov, 2022;Jayne et al, 2010). Such investment and policies must invite the private sector to maximize their investment, output, and social impact (Kaya & Kadanalı, 2021;Kumar et al, 2017). Private actors, including financial institutions and commercial banks, should consider offering agricultural credit to the larger-scale production farms and the smallholder farms in Africa.…”

“…Recent tentative studies in Africa have been limited only to agricultural finance policies and recommendations (Sikandar et al, 2021). One study done in turkey found that agriculture loans and deposits positively impact agriculture production (Kaya & Kadanalı, 2021). Likewise, Nigeria discovered the same effects (Asaleye et al, 2020).…”