Rural ICT Penetration, Bank Credit, and Agricultural Sector Performance: A Panel ARDL Analysis in Eastern Indonesia

Abstract

The relationship between ICT, the financial sector, and output growth has been extensively studied, however, macro-economic studies with an emphasis on the role of rural ICT on agricultural performance are few and yield mixed findings. Additionally, past research has not given sufficient attention to how bank credit affects agricultural performance. This paper highlighted the dynamic effect of rural ICT penetration and bank credit on agricultural performance in Eastern Indonesia. We used secondary data taken from the Central Bureau of Statistics and the Financial Services Authority. The panel data covered 16 provinces of eastern Indonesia from the first semester of 2010 to the second semester of 2022 (2010S1-2022S2). Using the panel autoregressive distributed lag (ARDL) approach, the results showed that in the long run, rural ICT penetration and bank credit played a significant role in boosting agricultural performance. However, in the short run, the impact of rural ICT penetration and bank credit on agricultural performance was statistically insignificant. Finally, we recommended several important policies that can practically impact and contribute to improving agricultural performance.