College of Humanities & Social Sciences

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Browsing College of Humanities & Social Sciences by Subject "Agricultural value added as a fraction of GDP"

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    Financial Development and Agricultural Sector in Ghana: An Econometric Analysis
    (September, 2016) Ussif, Abdul-Aziz
    This study was purposefully carried out to determine the effect of financial development on Agricultural value added as a fraction of GDP. Time series data was employed covering a period from 1961 to 2014. The study also specifically investigated the trend dynamics (short and long run) of financial development and Agricultural value added as a fraction of GDP relationship. For the trend analysis, ARDL Bound test and FMOLS Wald test were used. Three different regression estimators were used for the impact analysis in order to derive a more convincing results. These are; Fully Modified Ordinary Least Square (FMOLS), Autoregressive Distributed Lag (ARDL), and Canonical Cointegration (CCR). The variables employed in this study are Agricultural value added as a fraction of GDP, Broad money supply as a fraction of GDP, Domestic credit to private sector as a fraction of GDP, Agricultural machinery and tractors per Agricultural land and rural population as a fraction of total population. Based on the ARDL coefficient diagnostic test, the result shows, there exist a short-run relationship among the variables and were cointegrated in the long run. Same was the case in the FMOLS Wald test when the variables; Agricultural value added fraction to GDP, M2 fraction to GDP, Domestic credit to private sector fraction to GDP and Agricultural Machinery and tractors per Agricultural land were employed in the model with FINSAP inserted in the model as a deterministic variable. The results from ARDL, FMOLS and CCR all indicated that increased financial development (when Domestic credit to private sector as a share of GDP was used as proxy) leads to a fall in Agricultural value added share of GDP. However with Broad Money Supply share of GDP, it was positively related to Agricultural value added per GDP but significant only in the ARDL estimate. This means, the effect depends on the measure used. These findings concretized the notion that, the best way to improve Agricultural output in Ghana is through subsidy and credit support from Government.