Towards Climate-Resilient Agricultural Growth in Nigeria: Can the Current Cash Reserve Ratio Help?

Round 1

Reviewer 1 Report

Comments and Suggestions for Authors

I read a valuable study, a topic not often addressed in agricultural research, especially in Africa, which needs urgent action to better adapt to climate change. I consider the choice of subject matter in the conditions of Africa as correct, the introduction to the study was well prepared. The research gap was well marked. I am glad that the authors included a solid chapter with a literature review.  The importance of financial instruments in better adaptation of agriculture to climate change was well highlighted. In the current environment, it is often indispensable to use external funding sources in this regard. The research method was solidly developed and does not raise any objections. The results are described extensively and accurately. The minus of the study, which I would like the authors to improve, is the separation of an additional chapter with just a discussion of the results. In good studies with Impact Factor, the discussion of results should be described as a separate chapter. Please avoid combining the results and discussion into one chapter because this shows a desire to do it in a summary and vague way. So please improve the structure of the paper in this regard. 

 

Author Response

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Author Response File: Author Response.docx

Reviewer 2 Report

Comments and Suggestions for Authors

This study examines how Nigeria's current Cash Reserve Ratio (CRR) and Monetary Policy Rate (MPR) affect bank lending to agriculture and agricultural output in the face of climate challenges. Using quarterly data from 2012 to 2023 and an autoregressive distributed lag model, it finds that the standard CRR fails to promote climate-resilient agriculture. The CRR does not effectively support credit allocation or output growth in the sector. The study calls for a green-differentiated CRR to better support agricultural resilience.

The authors should pay closer attention to the accuracy of the text, as there are several typographical and grammatical errors. For instance, on line 48, the phrase “an argent need” is most likely intended to be “an urgent need,” and on line 88, “are mostly challenge with the direct” probably should be “are mostly challenged with the direct.” There are also numerous other issues, such as “replete of” and “evidences,” which are incorrect. I suggest a careful review of the language and style throughout the manuscript.

Some parts of the article should be rewritten, as they are unclear. For example, while the paper refers to “The role of CRR in enhancing climate-resilient agricultural growth,” it is not initially evident how the authors intend to verify this relationship using the data. I recommend revising the structure of the article—possibly by introducing new sections—to guide the reader more clearly through each stage of the study and the rationale behind it.

The authors state that: “This study employs regression model, based on the assumption of a credit function given in terms of DMBs credit allocation to climate hit agriculture sector (CAS), wherein CRR and MPR are explicitly incorporated as determinants of the amount of credit availability to DMBs for lending to the severely climate impacted agriculture sector.”

It would be useful for the authors to formally present the proposed theoretical model in a dedicated subsection - not necessary within the methodology section - before presenting the econometric treatment of the model in section 3.2.

Given the nature of the study, I also recommend formulating theoretical hypotheses at the outset, to be tested in the empirical analysis. The formulation of the hypotheses should be supported by theoretical reasoning and a thorough literature analysis.

Finally, the reported Adjusted R-squared value is quite low. To what extent can the results be considered reliable, especially considering the limited number of observations?

To what extent results from this study support previous research?

Why do Authors believe that “concentrating on only agricultural sector, while excluding other sectors of the economy that could provide comparative outcomes, for deeper insights” is a limitation? The authors' work aligns well with the scope and focus suggested by the title.

Rather, considering the importance of the policy measure, it would be advisable to complement the analysis with a qualitative component, such as focus groups or in-depth interviews with farmers.

Author Response

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Reviewer 3 Report

Comments and Suggestions for Authors

Review Comments and Suggestions:

This article focuses on the significant contemporary issue of how the agricultural sector in Nigeria can achieve climate-resilient growth under the backdrop of climate change. It is highly relevant and timely, offering valuable references and insights for Nigeria and other developing countries in coping with climate change and promoting sustainable agricultural development. The topic is well-aligned with contemporary needs, and the overall research framework is relatively complete with a clear logical structure. However, there are several areas where the paper could be improved, as detailed below:

1.The data used by the author is sourced from the Central Bank of Nigeria, but it is not explicitly stated whether the data has been seasonally adjusted. This ambiguity may compromise the accuracy of the data analysis. Non-seasonally adjusted data can be subject to seasonal fluctuations, which might lead to misleading results.

2.The data sample spans from the first quarter of 2012 to the fourth quarter of 2023, yet there is no mention of whether the data has been processed for missing values and outliers. If missing values or outliers are not handled, they can degrade data quality and subsequently affect the reliability of the research findings.

3.In terms of variable selection, the chosen indicators for measuring agricultural credit and agricultural output growth may not fully and accurately reflect the actual situation of climate-resilient agricultural growth. For example, using only the credit extended by deposit money banks to the agricultural sector as a measure of credit allocation may overlook other potential funding sources or informal financial channels that support agriculture.

4.The study employs the Autoregressive Distributed Lag (ARDL) method for analysis but does not provide a detailed explanation of why this model was chosen and its advantages over other models. Although some strengths of the ARDL method are mentioned, a more in-depth explanation and justification are needed for readers unfamiliar with this method to understand why it is the most suitable for the research question.

5.The model only includes the Cash Reserve Ratio (CRR) and the Monetary Policy Rate (MPR) as independent variables. It is uncertain whether other important variables that may affect climate-resilient agricultural growth have been omitted, such as fiscal policy variables, specific indicators of climate change (e.g., precipitation, temperature), and agricultural technological progress. These factors might influence the research outcomes, and their absence may lead to model specification bias.

6.The interpretation of the short-run and long-run effects in the model could be further elaborated. Although the short-run and long-run coefficient estimates are mentioned, the economic implications of these results and comparative analyses with other research findings are not sufficiently comprehensive. This makes it difficult for readers to fully grasp the significance of the study's discoveries.

7.The results show that the effects of cash reserve ratio on agricultural credit allocation and output growth are different in the short and long term, but the reasons for these differences are not thoroughly analyzed. Whether they are related to factors such as the size of Nigeria's financial market, bank behavior, and agricultural sector characteristics requires further investigation.

8. Decimal places in tables, figures, and text should be consistent. For example, decimal places in Table 6 are inconsistent.

9. The conclusions and implications should be further refined to make them more targeted and practical.

Comments for author File: Comments.pdf

Author Response

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Round 2

Reviewer 1 Report

Comments and Suggestions for Authors

My earlier comments were about the inadequate structure of the work. Now the authors have made appropriate improvements, the literature review chapter is well exposed. The discussion of results and conclusions are well prepared. The results and visualization are presented in an exemplary manner. I recommend the paper for publication. I thank the authors for undertaking the proofreading of the text.

 

Author Response

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Reviewer 2 Report

Comments and Suggestions for Authors

The authors have conducted a thorough revision and have responded comprehensively to my comments.
Since two hypotheses have been formally developed in Section 3 of the paper, I suggest explicitly referring to each of them in Section 5 (Results). This has been done for Hypothesis 1 (line 669, subsection 5.2.1), but not for Hypothesis 2.

Author Response

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