Impact of Credits, Stock Market Index, and Trade Variables on Motivation for Investment in Agriculture Sector

Abstract

The extant study was conducted to examine the impact of credits, stock market index, and trade variables on the motivation for investment in the agriculture sector. For this purpose, time-series data of the 1985-2018 period published by the Central Bank were used. The following variables were employed to test research hypotheses: Shadow Exchange Currency (E), stock market index of firms (SI), food price index (FP), and the dependent variable of Tobin's q. According to results obtained from econometric tests, including Johansen and Juselius cointegration and ARDL tests through Eviews and Microfit software, credits (CR) had a long-run positive and significant impact on Iran's agriculture sector. Results of data analysis indicated that SI had a positive and significant effect on motivation to invest in Iran's agriculture sector within the long term. In terms of other trade variables, long-run analysis results indicated independent variable of Y (shadow exchange currency) had no significant effect on dependent Tobin's q variable at 10% level (Prob.< 0.1 ). Moreover, interest rate (R) had a negative impact on dependent Tobin's q variable in long term, while food price index and agricultural sector export (EX) had positive impacts on dependent Tobin's q variable. The results of the analysis in the short-run trend indicated a positive and significant impact of CR in long term on motivation for investment in Iran's agriculture sector in short term. The stock market index (SI) had a positive and significant effect on the motivation to invest in Iran's agriculture sector. According to the results, the dependent variables of interest rate (R) and agriculture sector export (EX) were not statistically significant at the 10% level. In short term, the shadow exchange currency (Y) was effective contrary to the long term. According to results, rural inflation rate (P) had a higher effect on dependent Tobin's q variable in short term compared to the long-run trend. Contrary to the long term, the short-run effect of FP on dependent Tobin's q variable was lower.