Assessing the Dynamics of Green Finance and its Impact on Agricultural Productivity in Nigeria

Abstract

This study examines how green finance affects agricultural productivity in Nigeria. As climate change and environmental degradation threaten agricultural development, green finance provides a crucial mechanism for promoting sustainable agricultural practices. We used time-series analysis, representing green finance by green bonds, green credit, and green insurance, and measured agricultural productivity by the agricultural sector's contribution to Nigeria's gross domestic product. We employed Maximum Likelihood Estimation (MLE) in the Autoregressive Distributed Lag (ARDL) model to analyze the data. Our results indicate that, in the long run, green bonds, renewable energy production, annual rainfall, and temperature positively and significantly influence agricultural productivity. Green credit and green insurance show a positive but insignificant impact on agricultural productivity. Greenhouse gas emissions have a significant, negative impact on agricultural productivity, while regulatory quality has an insignificant, negative impact. Our study offers policymakers and stakeholders insights regarding the role of green finance in enhancing agricultural sustainability and productivity in Nigeria, shaping climate-resilient development strategies. We recommend that policymakers implement robust screening and monitoring processes for green bond issuance and green credit approvals.