Impact of Credit on Agricultural Growth and Employment in Iran (Using provincial panel data)

Agriculture in Iran, like many developing countries, faces financial constraints and The lack of adequate credit has created many challenges. Therefore, bank credit is of special importance.This study aimed at exploring the effect of formal credit on agricultural growth and Employment in Iran, using a unique provincial panel data set during 2000-2013. Different panel data econometrics techniques were applied. The main results indicated, on average, positive association between the sector growth and formal credit provided by the Agricultural Bank. The same relation was found for Employment.but was found on average, negative association between the sector employment and formal credit provided by the Agricultural Bank. though the size of effect differed among provinces. According to,the credits of the agricultural bank, increase the growth And agricultural growth, contributes to an increase in employment. Therefore, given the relationships between credits, growth and employment, Redistribution of credits based on agricultural potentials of provinces is recommended, as a key factor for increasing employment-related impact of credit, and increasing growth-related impact of credit.