Raising Maize Productivity through Agricultural Credit A: Case Study of Commercial Banks in Pakistan

Abstract

Agriculture is an extremely important sector of Pakistan’s economy. This sector contributes more than 20.9 percent to the Gross Domestic Product (GDP) and provides employment to 43.5 percent of the total labour force of the country. Almost 68 % of the population of Pakistan lives in rural areas and earns its livelihood, directly or indirectly, from agricultural activities such as  crop cultivation, livestock rearing, labour in agriculture, agriculture input supply, transportation of agricultural output to the market etc. Thus, in Pakistan  commercial Banks such as Allied Bank limited (ABL),United Bank limited (UBL),National Bank limited (NBP), Muslim Commercial Bank (MCB) and Habib Bank Limited (HBL) have been playing vital role in the provision of agriculture credit for the last two decades. The government of Pakistan has been extending loan to small farmers for adoption of new farm technology to enhance agricultural productivity. Therefore, the main objective of this study was to investigate the impact of agricultural credit on maize production by using the secondary data for the period of 1991-2014. Cobb- Douglas production function was applied to estimate using OLS method and all the variables transformed to per cultivated hectare. Thus, results indicates that agricultural credit, maize cropped area and agricultural labour force are positively significant related to maize production.

Keywords: Institutional credit, Maize production, Time series analysis, Pakistan