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2008 AEC - Importance of Agricultural Credit in Ghana’s Credit Sector: A Logit Model Analysis


This study investigates the importance of agriculture, in terms of the volumes and trends of agricultural credit delivered by the state owned Ghana Commercial Bank. To achieve this objective, the time profile of the volume of agricultural credit delivered over the period, 1970 – 2003 is described. Both a Logit model analysis and a time profile analysis is adopted to further understand the importance of agricultural credit, considering the major contribution of agriculture to the Ghanaian economy. Results from the study show that there has been a decline in the volume of credit given to the agricultural sector over the period of the study. The share of Ghana Commercial Bank’s agricultural credit in the bank’s total credit, the shares of GCB in total commercial banks’ agricultural credit and in total commercial and secondary banks’ agricultural credit declined during the period. Results from the Logit model also indicate the impact of financial liberalization (structural adjustment) on agricultural credit delivery. The mean of the real volumes of GCB’s agricultural credit and the shares of GCB during the postfinancial liberalization period tended to be less than those for the pre- financial liberalization period, as demonstrated by the conventional t-test.

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