Special agricultural lending Institutions - the Case of Macedonia

Goran Kovachev

MPRA Paper from University Library of Munich, Germany

Abstract: Accounting over 10% of country’s GDP, agriculture has substantial role in Macedonian economy. As a viable, yet risky economic sector, it is of great significance for this paper to show to the policymakers that creating special financial (sometimes state owned) institutions for lending in agriculture is a key element in helping farmers to enhance agricultural activities, thus to obtain self-sustainability. One such institution already operating in Macedonia is Agricultural Credit Discount Fund (ACDF). The main purpose of this study is to emphasize the importance of ACDF’s operations in expanding the outreach and accelerating economic welfare of farmers and rural poor. Brief analysis of ACDF’s performances in the last 10 years shows that the Fund operating in close collaboration with the participating financial institutions and the Government has significantly succeeded in increasing banks’ agriculture credit portfolio by 204%, decreasing interest rates by 8.5 percentage points and supporting over 15,000 jobs or about 1.6% of nation’s work force. The general conclusion of the study suggests that ACDF’s ‘modus operandi’ could be a guideline for similar institutions in developing and transition countries, as it creates prerequisites for easier access to finance, stronger competition among banks and increased income to its beneficiaries.

Keywords: agriculture; Macedonia; agro-finance; Agricultural Credit Discount Fund; Macedonian Bank for Development Promotion (search for similar items in EconPapers)
JEL-codes: E5 G2 H8 Q1 (search for similar items in EconPapers)
Date: 2014-03-31, Revised 2014-03-31
New Economics Papers: this item is included in nep-agr, nep-ban and nep-tra
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Published in World Review of Business Research 1; March 2014.4(2014): pp. 240-252

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