Abstract :
From the importance of food security and sustainable agricultural production in the future, we are necessary to know the main determinants and to understand the future policy implications. This study examines the impact of financial development (financial depth and financial efficiency) on agricultural productivity growth in 3 groups of countries namely high, middle-upper, and middle-lower income classes. This study used a panel ARDL model with different lags in each variable from 1991 until 2017. Our results show that financial development is very important for the three groups of countries to increase their agricultural productivity. Especially, it was found that financial depth and efficiency have a bigger effect on agricultural productivity in middle-upper-income countries. Contrast to previous results, financial efficiency was found not to affect agricultural productivity in middle lower-income countries. In addition, agricultural productivity also is increased by several factors such as physical capital and human capital. Therefore, this research encourages governments and central banks to gradually improve financial depth to become one of the drivers of improvement in the agricultural sector. In addition, the financial efficiency must be improved to encourage agricultural productivity, especially in the high and middle-upper countries.