DOI: 10.36347/sjahss.2014.v02i02.039

Pages: 372-376

The agricultural performance engrosses many production factors and agricultural credit is one of them. It needs of time that credit agencies come up to help farmers in applying and undertaking the improved farm practices. Thus, the present study attempts to determine the impact of agricultural credit of commercial banks on agriculture production in Nepal by estimating Cobb Douglas Production Function for the period of 2002-2012 using time series data obtained from various issues of Economic Survey, Banking and Financial Statistics, Ministry of Finance and Statistical Information on Nepalese Agriculture, Ministry of Agricultural Development, Government of Nepal. As per the model estimated during the period, the coefficient of natural logarithm of agricultural credit per cultivated area which is the major explanatory variable is positive and significantly impacts the agricultural production of the country i.e. a percentage change in agricultural credit flow of commercial banks will on an average brings 0.183 percent change in agricultural gross domestic product (AGDP). Although, the consumption of fertilizer and improved seeds showed positive relation with AGDP do not significantly bring changes in agricultural production in the country during the period. Thus, the study bring to a close estimation that agricultural credit flow of commercial banks have positive impact on agricultural production and is significant determinant of improving Agricultural Gross Domestic Product of the agrarian country like Nepal.