MONETARY POLICY SHOCK AND AGRICULTURAL SECTOR PERFORMANCE IN NIGERIA

Abstract

The study examined the impact of monetary policy on agricultural sector performance in Nigeria and 
also investigated the relationship between them. The study adopted the Autoregressive Distributed 
Lag model (ARDL) as the estimation technique to capture the impact of monetary policy on 
agricultural sector performance from 1986 to 2023. Data were sourced from Central Bank of Nigeria 
Statistical Bulletin and National Bureau of Statistics. The study found that maximum lending rate and 
broad money supply have a positive and significant impact on agricultural sector performance in 
Nigeria while the agricultural export has a positive but insignificant impact. Also, it was revealed that 
exchange rate and inflation rate have negative but significant impact on the performance of 
agricultural sector, while commercial banks credit to agriculture has negative and insignificant 
impact. Based on the findings, the study recommended that the government should provide more 
credit to the agricultural sector with adequate supervision of fund, as it would contribute significantly 
to the economy. The government should implement low interest rate as it encourages rural farmers to 
borrow and invest in large scale agricultural activities.