The study studies the effect of commercial bank credit on agricultural sector output in Nigeria. The study uses time series data from 1986 G20 to 2024 G20 sourced from the Central Bank of Nigeria Statistical Bulletin and National Bureau of Statistics. In order to prevent the spurious regression result, stationarity properties of these time series data were investigated with Augmented Dickey-Fuller (ADF) test. The ADF results revealed that the variables were of different orders of integration, justifying the use of Auto-Regressive Distributed Lag (ARDL), as ARDL can be used when some series are integrated at I (0) and others at I (1). The results showed that they were positive and significant impact of Commercial Bank Credit to Agriculture (CBCA), Agricultural Credit Guarantee scheme (ACG) and lending interest rate on crop production output in Nigeria. Results further indicated that all three independent variables, commercial bank credit to agriculture, agricultural credit guarantee scheme and lending interest rate had positive and significant effective on animal production output. This, however, was not the case for commercial bank credit to agriculture, agricultural credit guarantee scheme and lending interest rate as all these target predictors did not have positive significant effect on the fishery production output in Nigeria. The study, however, concluded that policy implementation of mechanisms to enlarge agricultural credit and improve the sector’s access to commercial bank credits in Nigeria; agricultural credit guarantee schemes be put in place in all the local government; and implementing concessionary interest rates on loans with regards to agriculture could lead a significant increase in output from this economically viable sector. It therefore recommended Agricultural Value Chain Finance (AVCF), an innovative approach for how to finance agriculture in Nigeria. AVCF deploys financial literacy trainings, savings, mechanized farming practices, budgeting and cash flow management to mitigate default risks and enhance the portfolio quality of agri-credit.

Keywords: commercial bank credit, agricultural credit guarantee scheme fund, agricultural sector output.