The Relationship Between Real Agricultural Gross Domestic Product and Agricultural Loans

Abstract

The aim of this study is to determine the relationship between the real agricultural gross domestic product, which is one of the economic indicators of rural development and total agricultural loans among agricultural financing instruments. The study covers the years of 1998-2018. The real agricultural gross domestic product and the total agricultural loans data are included in analysis. In this study, to make the right model selection, the Advanced Dickey-Fuller unit root test is used. After determining the unit root levels of the variables by the Advanced Dickey-Fuller unit root test, the Engle-Granger two-stage cointegration and Granger causality tests are performed to determine whether there is cointegration and causality relationships between the variables. The Engle-Granger two-stage cointegration analysis shows that the total agricultural loans and the real agricultural gross domestic product variables act together. Also, Granger causality test result indicates that there is a unilateral causality relationship from the agricultural loans variable to the real agricultural gross domestic product variable. In other words, it can be said that the total agricultural loans affect the real agricultural gross domestic product.