Effect of Agricultural Credit Banks on the Value Added of Agricultural Sector in Iran

Authors

Abstract

Abstract
Monetary and credit policies have a special place in the development programs. So that, granting banking facilities are one of the effective and determining factors in the development and growth in economic sectors. Due to the presence of small private investors in the agricultural sector and poor financial power of most of farmers, financing of agriculture sector, often is done by relying on facilities that received from the banks, particularly in the form of assignments facilities of agricultural bank in Iran. This study investigated the effect of assignment and non-assignment credits of agricultural bank on the value added of agricultural sector during the period 1979-2008 using of Johansen and Juselius’s cointegration in the form of Vector Autoregressive. The results indicate that assignment and non-assignment credits have a positive and significant effect on the value added of agricultural sector, of course, the effect of assignment credits was higher than no-assignment credits. Therefore correct and optimal credit policies in the form of assignments facilities can have an important role in the capacity building of production and growth of agricultural sector.
JEL Classification: Q14
Keywords:
Assignment Credits, Non-assignment Credits, Value Added of Agriculture Sector, Vector Autoregressive (VAR)