ABSTRACT

The study determined the effect of agricultural loans of microfinance bank on the grassroots economic development of Nigeria, using time series analysis spanning from 2012-2017. The data set were analysed using Ordinary Least Squares (OLS) simple regression technique. From the results, the study found significant relationship between microfinance bank agricultural loans volume, microfinance bank interest rate and microfinance bank investment on Gross Domestic Product in Nigeria. In But the need to address these issues such as agricultural funding led to the transformation of community banks to microfinance banks in 2005 (CBN, 2005). Reduced interest rate of microfinance banks leads to high loan volume which affect growth in SMEs and economic growth. Also increase in microfinance bank investment in turn increases Gross Domestic Product in Nigeria. Based on the findings, we recommend that (i) overemphasis on collateral should be reduced, so that great and small will have equal access to loans and should be made available to individuals at the right time. (ii) Credit risk management by the MFBs, setting the liquidity ratio by the Central Bank at levels that will not over-contract the ability of MFBs to extend loans and advances to microenterprises and, control of inflation by the relevant authorities should be properly addressed. (iii) Supply of loans and advances by the MFBs to enhance their contributions to economic growth and development of Nigeria should be increased including mobilization of more deposits, expansion of shareholders’ base and fund. 

TABLE OF CONTENTS

Title Page i

Declaration ii

Certification iii

Dedication iv

Acknowledgement v

Table of Contents vi

Abstract v

CHAPTER ONE 1

INTRODUCTION 1

1.1 background of the study 1

1.2 Statements of the Problem 5

1.3 Objectives of the study 6

1.4 Research Question 6

1.5 Research Hypothesis 6

1.6 Scope of the Study 7

1.7 Significance of the study 7

1.8 Limitations of the Study 8

1.9 Definition of terms 8

CHAPTER TWO 10

REVIEW OF RELATED LITERATURE 10

2.1 Conceptual Framework 10

2.1.1 Meaning of Agricultural Loans and Microfinance 10

2.1.2 Grass roots development 12

2.1.3 The Nigeria Micro Finance Banks (MFBs): Origin and Benefits 17

2.1.4 Nigerian Commercial Banks and Microfinance 19

2.1.5 Microfinance and Poverty Alleviation 19

2.1.6 The Role of Microfinance Banks (MFBs) 21

2.2 Theoretical Framework 22

2.2.1 Classical microfinance theory 22

2.2.2 School of thought Theory 24

2.3 Empirical Framework 25

CHAPTER THREE 29

RESEARCH METHODOLOGY 29

3.1 Research Design 29

3.2 Source of Data 29

3.3 Population of the Study and Sample Size 29

3.4 Sample Size and Sampling Technique 29

3.5 Analytical Procedures and Variable Specifications 30

3.6 Analytical Technique 30

3.7 Test of Significance 31

3.7.1 Decision Criterion 32

CHAPTER FOUR 33

DATA PRESENTATION, ANALYSIS AND DISCUSSION OF FINDINGS 33

4.1 Data Presentation 33

4.2 Test of Hypotheses 38

4.3 Discussions of Findings 39

CHAPTER FIVE 41

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION 41

5.1 Summary of Findings 41

5.2 Conclusion 41

5.3 Recommendations 42

References

Appendix