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CHAPTER THREE

RESEARCH METHODOLOGY
3.1 INTRODUCTION
We shall be examiming the the research methodology used in the research
work. Research Methodology involves a series and combinations of the
methods aimed at reaching our research conclusions as evidenced in the
research hypothesis and statement of problems.
3.2 DATA REQUIRED AND SOURCES
To do justice to the topic of our research, we shall be mining our data from
secondary sources such as the Central Bank of Nigeria (CBN) (NBS); the
Federal Office of Statistics (FOS) and other relevant government and
private sector organisations ( that are stakeholders in the agricultural
finance subsector of the economy).
3.3 MODEL SPECIFICATIONS
To examine comprehensively the relationship between the amount of loans
and advances to the agricultural sector and agricultural output for the
period under review,(1990-2009), we shall be examing if there is a linear
relationship between the variables .i.e degree or amount of agricultural
loans and advances and the level of agricultural output/productivity.
To this end, we shall be relating our analysis, by situating the relationship
mathematically as the function below:
Y=f(X),
Where Y=Dependent Variable, Agricultural Output, and

X=ndependent Variable, the amount of Agricultural Loans and
Advances.
3.4 DATA ANALYSIS TECHNIQUE
From our model specifications, it is imperative that, we establish a
quantitative relationship between the variables by applying appropriate
/relevant statistical technique. The aim of the statitistical technique is to
establish a functional relationship between the associated variables:
Agricultural loans and advances and their effect on agricultural productivity;
by employing regression and correaltion techniques.
Regression Analysis is a statistical tool which helps to predict one variable
from the other variable or variables on the basis of assumed relationship
between the variables.
The relationship can be written as;
Y
t=

a
o +
a
1
x
1 +
b
2
x
2 +
e
t......
where Y is the dependent variable, x
1,
x
2
are the independent variables and
e is the random term or stochastic term.

Simple Linear Regression using the LEAST SQUARES METHOD shall be
employed in the analysis of data as provided by our secondary sources.
CHAPTER FOUR
ANALYSIS AND INTERPRETATION OF DATA
4.1 INTRODUCTION
This study is focused on the evaluation of the relationship between
agricultural loans and advances on the degree of agricultural

ouput/productivity, and test the relevance of the stated hypothesis and
research questions.
The chapter is sub-divided into two main parts, the presentation and the
analysis and interpreation of our findings using the appropraite statitiscal
tool.
4.2 PRESENTATION OF DATA

We shall be analysing our secondary data as provided by Central Bank of
Nigeria (CBN) (NBS); the Federal Office of Statistics (FOS) and other
relevant government and private sector organisations, using simple linear
regression model (least squares method) to establish the relationship
between agricultural advances and loans and agricultural
productivity/output.

YEAR LOANS AND ADVANCES
(M)
AGRCULTURAL OUTPUT
(TONNES)
1990 84344.6 55964
1991 129605.8 67581
1992 132699.2 75085
1993 135185.2 78691
1994 138753.6 81802

1995 143706.3 84286
1996 149512.0 88080
1997 155934.8 90817
1998 162248.8 93401
1999 170813.9 96769
2000 175876.6 102646
2001 180660.0 88268.8
2002 190369.1 91297.5
2003 203012.6 98568.4
2004 216208.5 101695.3
2005 231463.6 111780.7
2006 248599.0 120472.7
2007 267051.7 121247.7
2008 NA NA
2009 NA NA
SOURCE: National Bureau of Statistics; Production Year Book; Central
Bank of Nigeria; Federal Ministry of Agriculture and Rural Development and
State Ministries of Agriculture and Natural Resources (APPENDCES A/B)




4.3 DATA ANALYSIS
We shall be using the Simple Linear Regression Model to analyse our
secondary data.
Y=Agricultural Output in million of Tonnes
X=Agricultural Loans and Advances.

4.4 HYPOTHESIS TESTING
The Null Hypothesis: H
0=
There is no significant relationship between the
amount of loans and advances to the agricultural sector and agricultural
output.
We shall test the Null Hypothesis using Ordinary least Squares Regression
Analysis at 5% level of significance.
n estimating the parameters of the regression line Y=b
0
+b
1
x, we use the
following formula

b
i =
n_x
i
y
i
-_x_y
n_x
2
(_x
2
)
b
o
=y- b
iX

b
i =
18. 298137S87724SS 311604S30 16484S310
18 S7633612SS170S ( 311604S30 )
2




034S9SS007

b
o
9138073 034S9SS007 17311363
3169120
8egresslon LquaLlon ls glven by
034S9SS007+3169120k
Cur kegress|on Lquat|on |nd|cates that there |s a ||near
re|at|onsh|p between the amount of Agr|cu|tura| |oans
and advances and the |eve| of Agr|cu|tura| Cutput
1o geL Lhe degree of Lhe relaLlonshlp beLween Lhe Lwo
varlables le agrlculLural ouLpuL and Lhe level of
agrlculLural loans and advances we compuLe Lhe
8CuuC1 MCMLn1 CC88LLA1lCn CCLlllClLn1 glven
by Lhe formula below
r n_x
i
y
i
-_x_y
\ n_x
2-
(_x)
2
. n_y
2
_(_y)
2

18 298137S87724SS (311604S30 16484S310
v18S7633612SS170S_( 311604S30)
2
18 1SS84876910341_ (16484S310)
2



22982204431647
241619L+11

r093

1hls lndlcaLes LhaL Lhere ls a very sLrong relaLlonshlp
beLween AgrlculLural CuLpuL and Lhe amounL of
AgrlculLural loans and advances glven ouL by ueposlL
Money 8anks (uM8s)

We Lherefore accepL our AlLernaLe PypoLhesls
P
A
1here ls a sLrong relaLlonshlp beLween AgrlculLural
CuLpuL and AgrlculLural loan and advances ln nlgerla

441 1LS1lnC lC8 1PL SlCnlllCAnCL Cl r
1o LesL Lhe slgnlflcance of Lhe relaLlonshlp Lhe LLesL ls
used
We use Lhe formula below
L
r x
v n2
1r
2

Lhe sLaLlsLlcs above has a sLudenL L dlsLrlbuLlon wlLh n2 degrees of
freedom

Po ls accepLed aL Lhe 3 level of slgnlflcance lf

LL
003
(n2) oLherwlse Lhe null hypoLhesls ls re[ecLed ln favour
of Lhe alLernaLlve hypoLhesls P
A


93
v
182
1093
2

L 1217

Slnce Lhe value of L calculaLed ls greaLer Lhan 2120 L
0973
16
we
re[ecL Lhe null hypoLhesls and conclude LhaL AgrlculLural CuLpuL
and AgrlculLural Loans and Advances are slgnlflcanLly
correlaLed


8LlL8LnCLS
nworuh Codwln L looJomeotols of ApplleJ
Ooootltotlve 1ecbolpoes fot Moooqemeot ueclsloo(2
oJ

J) 2001 8on AssoclaLes Lagos


























YEAR X Y X Y
1990
84,344.60 55,964.00
711401134916

313196929600
1991
129,605.80 67,581.00
1679766339364

436719136100

1992
132,699.20 75,085.00
1760907768064

363773722300
1993
135,185.20 78,691.00
1827303829904

619227348100
1994
138,753.60 81,802.00
1923236131296

669136720400
1995
143,706.30 84,286.00
2063130063969

710412979600
1996
149,512.00 88,080.00
2233383814400

773808640000
1997
155,934.80 90,817.00
2431366183104

824772748900
1998
162,248.80 93,401.00
2632467310144

872374680100
1999
170,813.90 96,769.00
2917738843321

936423936100
2000
175,876.60 102,646.00
3093237842736 1033620131600
2001
180,660.00 88,268.80
3263803360000

779138103344
2002
190,369.10 91,297.50
3624039423481

833323330623
2003
203,012.60 98,568.40
4121411373876

971372947836
2004
216,208.50 101,695.30
4674611347223 1034193404209
2005
231,463.60 111,780.70
3337339812496 1249492489249
2006
248,599.00 120,472.70
6180146280100 1431367144329
2007
267,051.70 121,247.70
7131661047289 1470100473329


311604S30

16484S310 S7633612SS170S 1SS84876910341