Leasing as an effective tool for agricultural financing: within the example of Armenia

Abstract

Abstract. Through the decades’ Armenian agriculture doesn’t have sufficient growth. Technologies and methodology used by farmers are not sufficient for modern production creation. Financing system of rural areas are less effective as lack of stable income and low-price collateral doesn’t let banking institutions to actively finance the sector. The main purpose of this study is to define problems of agricultural financing and determine leasing as an effective tool for agricultural financing. Methodology of this study is based on quantitative analysis among farmers and other borrowers to take out leasing role in financing process and other relevant issues. Empirical data analysis of different countries’ experience and survey among local rural habitants were made to identify the most effective tools of agricultural financing. As a result, lack of effective financial and technological assistance has identified as an obstacle of agricultural development in Armenia. The importance of agriculture in the development of the country's economy was substantiated. The importance of public awareness in increasing the applicability of leasing has been identified. As a scientific novelty, the thesis of leasing as an effective financial tool for agricultural lending has been proven. The specifics of leasing efficiency for agricultural lending are explained. Absence of collateral as the only advantage of leasing was rejected.