Policies and performances of agricultural/rural credit in Bangladesh: what is the influence on agricultural production?

This paper evaluated the performance of various lenders’ agricultural/rural credit programs, assessed the relationship between agricultural credit and farm production, and investigated the major challenges and proposed remedial measures for future policy direction. The study employed time series data collected from various national and international data sources. Both linear and exponential equations adopted for analyzing the time series data. Pearson Correlation equation also applied to determine the relationship between credit disbursement and farm production. It is found that the performance of agricultural/rural credit of various lenders improved due to policy shift in recent years and the inclusion of new financial intermediaries - Private Commercial Banks (PCBs) and Foreign Commercial Banks (FCBs). Both the allocation of credit to agriculture and the target attainment had however been found less satisfactory, although agricultural credit and production revealed a strong positive correlation at 1% level. The findings will help policy makers and practitioners to gain better understanding of agricultural/rural financing and lead to better credit policies and programs.