Impact of agricultural finance in rural areas - case study Kosovo

Many surveys carried out in last years in Bosnia and Herzegovina (BiH) showed that one of the most important problems faced by farmers and rural entrepreneurs is the lack of and/or difficult access to financial resources. The paper aims at analysing rural finance and access to credit in south-eastern BiH. An exploratory survey was performed in March 2013 with 147 rural households from Vlasenica, Han Pijesak, Milici, Zvornik, Rogatica, Pale, Bratunac, Sokolac and Foca municipalities. About a half of the interviewees used loans for different purposes such as the purchase of agricultural equipment and machines, agricultural input, livestock and transport equipment and renovation of buildings but also for covering children education expenses or even for repayment of other debts. The interviewed rural households prefer borrowing from the formal sector (banks), followed by the informal sector (friends, relatives, private moneylender, supplier credits) then the semiformal sector (micro-fin...

Academic Journal of Interdisciplinary Studies, 2015

An efficient rural financial market plays an important role in the development and growth of productivity in agriculture and livestock. This means setting up a financial system to meet the typical functions of a market economy and above all the mobilization and allocation of financial resources to this sector and coordination with sources of donors and of the state budget. In this context, perhaps it is useful to set up a bank profiled in agriculture and rural development, ending anarchy of today and by establishing opportunities for better coverage to the growing needs of this sector. This would help for the displacement of available funds to the agrarian sector, either through a specialized bank without curb or deter the existing commercial banks, and the combination with other efforts in the form of investment funds, would constitute a good opportunity for to finance agricultural development with nonpublic resources.

This Discussion Paper is part of the project Sustainable Rural Development with Emphasis on Agriculture and Food Security within the Climate Change Setting (SARD-Climate) financed by the Finnish Foreign Ministry

1980

Paper 'reviews the role of Rural Financial Markets (RFM) in the development of low income countries. Author notes that far too many important RFM policy decisions are made with little or no assistance from researchers. Author notes that small amounts of carefully done research can have a major impact on very important policy decisions and stresses the need to have policy-oriented research on RFM issues.

Purpose: In this paper, the authors set out to establish if there is a link between finance and economic growth in rural areas. The purpose of this paper is to evaluate the relation between credit by major lenders in rural areas – commercial banks and Farm Credit System (FCS) institutions – and economic growth for the period 1991-2010. Design/methodology/approach: The motivation for this work comes from empirical studies showing a link between economic development and financial system development as well as from work which highlights the positive role of long-term finance provided by banks. The authors use two alternative panel data sets and fixed effects models to estimate the causal effect of credit supply (with lagged explanatory variables) on agricultural GDP growth per rural resident. Findings: The authors find a positive association between agricultural lending and agricultural GDP growth per rural resident with additional billion in loans (about a third of the actual average) associated with 7-10 percent higher state growth rate with this association stronger during the 1990s. Regional data confirm these results. The results point to a positive link between credit and economic growth in rural areas during that period, attributable to the lending by FCS institutions and by commercial banks. Research limitations/implications: Data availability limits the scope of this paper. The authors use state level balance sheet data available for the 1991-2003 period and annual data for 2003-2010 period. An additional regional data set is constructed for 1991-2010 with more aggregated data for the ten USDA agricultural production regions. The small number of panels limits the ability to use more sophisticated econometric models and the choice of dependent variables that captures economic growth. Practical implications: By provides evidence that agricultural finance and in particular lending contribute significantly to the growth of US agriculture, this paper contributes to the policy debate on weather support for agricultural finance initiatives is justified. Originality/value: The authors are not aware of another study that has linked agricultural lending by commercial banks and FCS institutions to growth in rural areas in the USA.

Perspectives on Global Development and Technology, 2015

This paper explores bank lending to agriculture in Fiji, a small developing country. It examines bank lending by bank type-commercial bank lending and lending by the Fiji Development Bank (FDB), a non-commercial bank. The findings reveal the importance of both banking types as well as a significant drop in lending since 1993, despite the need to fund the agricultural sector to boost food production activities. Interest rates, government spending and food production strongly determine FDB lending to agriculture. The availability of arable land has a negative and significant effect on FDB lending to agriculture. The results show commercial banks are performing a slightly different role in the agricultural sector than the Fiji Development Bank; they appear to be unresponsive to economic variables that the FDB is responsive to.

This study investigates a current situation of agricultural credits in Kosovo from which we may conclude how much these credits have impacted the development of small farms in Kosovo since this category of farms comprise a large percentage in the overall structure of farms. The number of small farms is being decreased recently which creates obstacles in the agriculture in Kosovo to become competitive in market. The study was done through the research of 140 small agricultural farms in four regions (35 farms in each region): Pristina, Gjilani, Gjakova and Prizreni. Data from research were processed in computer using Statistical Program for Social Sciences (SPSS) software and the results were calculated using statistical methods such as Chi-Square Test, P-value and Likelihood Ratio. As a conclusion of this research we found how much do agricultural credits help farmers in developing their small farms based on the current conditions of agricultural credits that financial institutions in Kosovo offer.

SSRN Electronic Journal, 2000

Working Papers, 1997

Initially, we explore the attitudes and perceptions of farmers and low farm profitability as potential constraints to rural financial intermediation and investment in agriculture. As part of this discussion we consider what is factual about the "access to credit problem." Second, we summarize ...

2017

Access to rural financial services has a potential to make a difference in agricultural productivity, food security, and poverty reduction. In this respect, the Government of Sierra Leone has recognized Rural Financial Services as an indispensable ingredient not only for investments in agriculture but also for the establishment of micro and small enterprises towards resolving the credit access problem of the poor. This paper attempted to look at Rural Financial Services in the country from financial access, financial sustainability and welfare impact angles using the case of Rural Finance and Community Improvement Programme (RFCIP) through the Financial Services Associations (FSAs) and the Community Banks (CBs). The study also investigated the constraints of the scheme and the factors determined access to loan. The study stated the following hypothesis: Access to rural financial services impact positively on agricultural productivity and poverty status of clients. RFCIP (FSAs and CBs) had not contributed to rural poverty and household food insecurity in Sierra Leone. The study seeks to affirm or negate this statement. The methodology is largely descriptive. Data were obtained from primary and secondary sources. The primary data includes interviews, while the secondary data from RFCIP archives, journals, periodicals, internets and abstract from published data. Ratio, percentages, tables and graphs were also used to analyze outreach, welfare and sustainability of the services. The study discovered that RFCIP outreach expanded in the period under review. It indentified that while RFCIP reached the very poor, their reach to the disadvantaged particularly to women is encouraging (more than 40% women serviced) even thought RFCIP is at infant stage. Also the impact study on the clients of RFCIP validates the hypothesis that assess to rural financial services impact positively on Agriculture productivity and poverty status of beneficiaries. From financial sustainability angle, the study discovered that RFCIP rural finance programme in Sierra Leone is hopeful. Its operational sustainability is also improving over time. The study also found low but increasing default rate. Although the study revealed positive result in terms of outreach, while RFCIP is at nascent stage, the policy implication is that RFCIP should contemplate on extending its outreach projects further into the interior part of the country, so that more communities or chiefdoms would benefit from the rural finance scheme. This could be achieved through widen the scope of the scheme’s decentralization policies. Nevertheless, this ideal picture of the findings, it should be noted that there are important factors that were not adjusted when the conclusion of the scheme’s financial sustainability is drawn. For example, Return on Asset and Return on Equity were not available during the survey. However, the study discovered that there is still the need to work towards optimal success of the rural finance scheme in Sierra Leone