ABSTRACT

The study determined the effect of agricultural loans of microjlnance 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 inicrofinance bank investment on Gross Domestic Product in Nigeria. In But the need to address these issues such as agricultural funding led to the tranjbrniation of community banks to microjinance banks in 2005 (CBN, 2005). Reduced interest rate of inicrofinance 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. (iO Credit risk management by the MFBs, setting the liquidity ratio by the Central Bank at levels thai 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.