Impact of Institutional Agricultural Credit on Agriculture Sector Growth and Rural Unemployment in Pakistan

Abstract

This research article studies the impact of credit given by different financial institutions to farmers for agricultural development and its impact on rural unemployment rate covering the data sample from 1990 to 2021. Agriculture sector is the main sector of Pakistan’s economy. It provides employment to 43.7 % of total labor force and its contribution in GDP of Pakistan is 22%. This study analyze the impact of institutional agricultural credit provided by ZTBL, COP and CB, Infrastructure, GDP and total cropped area (TCA) on Rural Unemployment rate and agriculture sector and the impact of rural unemployment rate on agriculture sector growth. For this purpose, time series secondary data from 1990 to 2022 is used. ADF test estimate that RU, ZTBL, COP, CB, INFRA, GDP and TCA is stationary at First difference and AG is stationary at level. To estimate the impact of ZTBL, COP, CB, INFRA, GDP and TCA Toda and Yamamoto Technique is used and find out that all the variables individually as well as jointly has impact on RU. RU has unidirectional causality with CB, INFRA and TCA while the causality of RU with ZTBL, COP and GDP is bi-directional.