The impact of public, private, and foreign bank agricultural loans on agricultural gross domestic product: a case study of Turkey


Sönmez H.

International Congress on Sustainable Agriculture, Iğdır, Turkey, 1 - 03 March 2024, pp.186-203

  • Publication Type: Conference Paper / Full Text
  • City: Iğdır
  • Country: Turkey
  • Page Numbers: pp.186-203
  • Dokuz Eylül University Affiliated: Yes

Abstract

The agricultural sector is important for economic growth and development in developing countries. Therefore, it is necessary to support the agricultural sector financially, and agricultural loans provide this support. Through agricultural loans, farmers can sustain their agricultural activities by accessing the necessary capital.The aim of this study is to investigate the effect of agricultural loans provided by public, private, and foreign banks on agricultural GDP in Turkey. The quarterly time series data has obtained cover the period from 2005:Q1 to 2023:Q3 for this purpose. The time series that have included seasonality have been incorporated into the model after being adjusted for seasonal effects. Initially, the stationarity of the series has been examined using the Augmented Dickey-Fuller unit root test. Then, the short run and long run relationships have been assessed using the Autoregressive Distributed Lag Bound Test approach. According to the findings obtained from the study, a positive relationship has been identified between agricultural loans provided by both public banks and foreign banks and the agricultural GDP. On the other hand, no significant relationship has been found between loans provided by private banks and agricultural GDP. Moreover, the error correction model coefficient has been found negative and significant statistically. This result indicates that short run deviations have converged to the long ruın coefficient in 2.33 periods. Also, agricultural GDP has increased by 0.12% when agricultural loans provided by public banks have increased by 1%. Similarly, a 1% increase in foreign bank loans has resulted in a 0.03% increase in agricultural GDP. Furthermore, the impact of agricultural loans provided by public banks on agricultural GDP has been higher compared to loans provided by foreign banks. It is suggested that increasing the share of agricultural loans provided by foreign banks and encouraging private banks has been necessary for the agricultural sector.