Prioritizing the Credit Allocation in Fars Province Agriculture Subsector Using Neoclassical Growth Model

The limited financial and credit resources of banks need to be allocated optimally. In addition, in order to exit from the financial freezing situation, banks and other financial institutions, such as Agriculture Bank, have to allocate resources to the economic activities and sectors in a way that it entails the highest return on capital. In this regard, the objective of this study is to analysis capital returns in Fars province agriculture subsectors using neoclassical growth model. The models include physical and human capital for each subsector. The applied data are panel data covering period of 2005-2014 throughout Fars province counties. The results showed that physical capital returns for agriculture subsectors are around 0.4 percent. It was also found that knowledge of labor or human capital does not substantially contribute to productions, indicating the traditional production method and mismatch of labor knowledge with production activity.