FINANCIAL INCLUSION AS A MODERATOR IN THE MONETARY POLICY–AGRICULTURAL OUTPUT NEXUS IN NIGERIA

Abstract

Global economic trends in recent times have witnessed increased monetary policy interventions together with rising investment in the agricultural sector; however, the relationship between these variables and the moderating role of financial inclusion remains inconclusive in the literature. This study examines the effect of monetary policy on agricultural output, assesses the effect of financial inclusion, and investigates its moderating role in Nigeria. Annual data spanning 1981–2024 were sourced from the Central Bank of Nigeria Statistical Bulletin. Agricultural output was regressed on monetary policy rate, financial inclusion index, exchange rate, interest rate, and an interaction term. The study employed the Generalized Method of Moments (GMM) and the Augmented Dickey-Fuller (ADF) test. Findings reveal that the interaction term is positive but statistically insignificant, indicating no moderating effect of financial inclusion. Exchange rate exerts a positive and significant influence on agricultural output, meaning that exchange rate depreciation enhances agricultural output while monetary policy rate is negative and insignificant, this suggests its ineffectiveness in the short term, finally, financial inclusion shows a negative and weakly significant effect, suggesting potential structural inefficiencies in access to finance. The study recommends targeted monetary and financial inclusion policies for farmers, improved financial literacy, and strengthened agricultural credit schemes to enhance productivity in the agricultural sector.