The Impact of Bank Credits on Iranian Agricultural Growth

Agriculture is one of the most important economic sectors in Iran and its growth is important for food security. Therefore, it is necessary to identify the determinants of agricultural sector. One of these factors is bank credits that provide investment opportunities for entrepreneurs. Some economists believe that the type of bank ownership (public or private) affects the relationship between the variables of bank credit and economic growth. Some of them are in favor of more government intervention and others are against government intervention in the payment of banking facilities. However, in previous domestic studies, the role of bank ownership has rarely been considered. Thus this study aimed at investigating the effect of bank credits on the growth of the agricultural sector with emphasis on the role of bank ownership. For this purpose, ARDL and Fuzzy-ARDL methods as well as quarterly data from winter 2009 to spring 2018 were used. The study findings showed that in Iran, investment enhanced the growth of the agricultural sector, but the increase in labor had a negative effect on it. In addition, the results showed that the facilities granted by state-owned banks were more effective than the facilities of private banks on the growth of the agricultural sector; this finding is in line with the views of the proponents of government intervention in the provision of banking facilities. Therefore, it is suggested that the share of state-owned banks in granting banking facilities to the agricultural sector be higher than that of private banks.For this purpose, the ARDL and Fuzzy-ARDL method is used. The used quarterly data cover winter 2009 to spring 2018. The results show the credit of state banks have more effect on agricultural growth in comparison to the credit of private banks.