Drivers of Credit Supply in Iran's Agriculture: Symmetric or Asymmetric Relationship?

Agriculture, one of the most important sectors of the Iranian economy that plays a vital role in providing food security and job opportunities, has always been faced with a lack of financial and credit resources. Therefore, identifying the drivers of credit supply to this sector is of great importance. The main objective of this study was to determine the factors affecting Agriculture Bank (Bank Keshavarzi of Iran) credit supply as the main source for financing agricultural activities, in Iran. In this regard, provincial panel data for period 2007-2020 and non-linear autoregressive distributed lag model, which distinguishes this research from those of previous years, have been used. The results indicate the asymmetric effect of all independent variables on credit supply of Agricultural Bank or the superiority of non-linear model in explaining the relationship between variables. For example, the positive shock on the value of bank assets with coefficient of 0.18 and its negative shock with coefficient of -0.05 will affect the growth of credit supply in the long run. Based on research findings and in order to increase credit supply, it is recommended that Agricultural Bank put the control of non-current receivable more effectively (especially through careful evaluation of borrowers' eligibility) in its policy priorities and, therefore, reduce credit risk and perform more effective services in financing of agricultural sector. In addition, an increase in the bank's assets through investment in modern information and communication technologies is strongly recommended.