The Spillover Effects of Agricultural Credit on Agricultural Value Added in Selected Western Provinces of Iran: Spatial Panel Approach

The Agricultural Bank is the main official financing organization in the agricultural sector of Iran, which has an irreplaceable role in financing the agricultural sector. The purpose of this study is to investigate the effect of the spillovers of allocated credits of the Agricultural Bank on the growth of agricultural value added in the western provinces of Iran during the period 2001-2019. For this purpose, the spatial panel econometric approach and the Solow growth model were used. The results of the study show that the nominal value of credits has a positive effect on the nominal value added of the agricultural sector, but the real value of credits has no significant effect on the real value added of agriculture, which indicates that credit in proportion to inflation has not increased. The effects of spillovers and the relationship between the agricultural sector growth in different provinces are also confirmed. Based on the results of this study, it is suggested that the allocation of agricultural bank credits should be determined based on the potential of each province; in other words, the agricultural bank should allocate more credits to provinces with higher productivity and production potential.