The Effect of Financial Market Development on Agricultural Growth Using ARDL

This study aims at investigating the effects of financial market development on agricultural growth over the period 1967-2007, using Beck and Levine model (2003) and ARDL technique. In addition, two variables are used to measure the development of financial market: the credit paid to agricultural sector (as an index of money market) and the volume of commodity exchange in burse market (as an index of capital market). The study results indicate that short-run and long-run effects of all variables in the model are the same. Capital market has a negative effect on the agricultural growth while this effect of money market is positive. Also, the coefficient of the estimated correction error has the expected sing and its value show that adjustment progress of entered shocks has high speed. Therefore, it is necessary that increasing agricultural growth with suitable doing in money and capital market for example create Competitive in banking system, optimal allocation of finance Resources in Sectors of Agriculture, Spread of agricultural commodity burses in Talented provinces and increasing of liquidity in stock market.


JEL Classification: C23, G0, E5

Keywords:
Financial Markets, Agricultural Growth, ARDL Model