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Financing Agribusiness by State Development Banks - the Case of Macedonia

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  • Kovachev, Goran

Abstract

In countries where agriculture has substantial role in generating domestic product, sustainable agro-finance can seriously increase economic development. It is well known that agriculture is perceived as risky to be financed by commercial banks. Therefore, creating specific agro-credit lines within state development banks is key element in enhancing agricultural activities. These state development banks, operating in close collaboration with the Government have a significant role in accelerating economic welfare of farmers and rural poor. This study tends to emphasize the importance of creating special lending products targeted towards agriculture. The focus will be put on comparison between the first pillar – direct lending to agriculture and second pillar – lending to agriculture through commercial banks showing the better viability of the later.

Suggested Citation

  • Kovachev, Goran, 2013. "Financing Agribusiness by State Development Banks - the Case of Macedonia," MPRA Paper 51094, University Library of Munich, Germany, revised Sep 2013.
  • Handle: RePEc:pra:mprapa:51094
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    More about this item

    Keywords

    sustainable agro-finance; agriculture; risky; economic welfare; rural development; state development banks; agribusiness; direct lending; indirect lending;

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • G2 - Financial Economics - - Financial Institutions and Services
    • H8 - Public Economics - - Miscellaneous Issues
    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture

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