The Impact of Islamic Banking on Agricultural Development in Northern Nigeria

The basic purpose of this research paper conducted is to report the findings of the experimental study conducted in Northern Nigeria, about the impact of Islamic banking on agricultural sector from the users and non-users (users of conventional banking) of Islamic banking. Descriptive and qualitative research is conducted and focuses on two main groups of banking customer’s users and non-users of Islamic banking and also informal interview with managers of some banks. A survey questionnaire was developed that subsequently get response from 520 respondents. Hypothesis analysis is the main tool of analysis in which mean, standard deviation; variance and chi-square tests are applied using SPSS 16.0. Findings from the study shows that there is significant relationship between Islamic banking and agriculture sector. Islamic banking is providing easy terms of financing like Ijarah, Diminishing musharaka, Murabaha, salam and bai salam and similarly providing different types of working capital like Murabaha, Musawamah, Salam, Muzara’a. These terms of financing increase the asset ownership, yield and income of farmers. The study recommends among other things that Islamic banks in Northern Nigeria should embark on massive awareness about the types and benefits of Islamic Financing to Agricultural development