Effect of agricultural financing on agricultural productivity in Kenya.

Abstract

The study aimed at determining the effect of agricultural financing on the agricultural productivity which is embarked on the following objectives: to find out the effect of water development financing on agricultural productivity, to determine the effect of asset financing on agricultural productivity as well as to determine the effect of livestock financing on agricultural productivity in Kenya. The study was construed around the theories of financial intermediary, trade-off theory of capital structure as well as pecking order theory. It adopted a descriptive design where the data was gathered from World Bank, AFC and KNBS between 1985 and 2015 pertaining the variables being studied. Data was entirely secondary and was analyzed though descriptive statistics methods, the time series model was fitted after thorough process on the suitability. The study found that water development financing was significant and had a positive effect on agricultural productivity, agricultural asset financing had a negative but significant effect on the agricultural productivity whereas livestock financing had a positive but insignificant effect on the agricultural productivity in Kenya. The finding was presented by use of graphs, tables and models. The recommendation for the study was of great significance to the agricultural finance corporation, Kenyan farmers, the ministry of agriculture, future researchers and academicians among others.