Econometrical Analysis of Determinants of Cash Flow of Institutional Lenders in Nigerian Agriculture: Macroeconomic Variables Perspective
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Date
2013-10-15
Journal Title
Journal ISSN
Volume Title
Publisher
IOSR-JHSS International Journal of Humanities and Social Sciences
Abstract
The purpose of the study is to examine the determinants of cash flow of institutional lenders in Nigerian agriculture. These determinants are deposit liability, Interest rate, reserve requirement, profit (revenue) and tenure of cash flow. The paper analyses the relationship between these macroeconomic variables and cash flow of institutional lender in Nigerian agriculture. Econometric method was used and linear functional form provided the best fit to estimate the relationship. The results revealed that deposit liability, interest rate and reserves requirement of the monetary authority were important and significant in explaining variability in the level of cash flow of institutional lenders in Nigerian agriculture. Correlation analysis indicated a strong and positive relationship (r = 0.98) movement between the determinants of cash flow. There was a high coefficient of determination (R2) value of 96%. However, the elasticity of the estimated co-efficient revealed that percentage (%) change in the deposit liability, reserves requirement and interest rate made cash flow in agricultural sector to change by 0.52%, 15% and -71.5% considerably. The study concludes that for health cash flow to be meaningful and productive in Nigerian agriculture, early disbursement of credit, feasibility studies, elimination of defective and dysfunctional productive environment, check mating diversion of credit by farmers and evaluating and monitoring of repayment program must be sustained by institutional lenders and other collaborative bodies. Moreover, supportive government credit guidelines and reformed monetary policy as well as desirable financial services, products and technologies need to be proactive to guarantee effective cash flow into Nigerian agriculture.
Key Words: cash flow, institutional lenders, agricultural productivity, credit and macro economic variables.
Description
Survey, Quantitative and Qualitative Research Design/Study
Keywords
Citation
Shitu, A. M. and Mshelia, I. S.(2013).