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Access to Bank Credit by Agricultural Producers in Kazakhstan: A Micro-Econometric Analysis

  • Sholpan Gaisina
Article
  • 1 Downloads

Abstract

The Republic of Kazakhstan is a Central Asian country that was formerly a republic of the Soviet Union. Kazakhstan is significantly different from other Central Asian countries. It is relatively large but with a low population: about 5.7 people per square km. Agricultural financing is a major aspect of economic reform in Kazakhstan. The issue is - What kind of financial resources are necessary to maintain the development of agricultural production? Internal resources such as profit, depreciation capital, various reserve and insurance funds cannot be relied on as a secure financial base. In Kazakhstan, state financial support of agriculture, which plays a significant role in developed countries, is episodic in nature, limited in size and frequently fails to reach target recipients. Banking system and non-banking credit institutions such as credit cooperatives could be potential investors and suppliers of financial resources. However, the current investment climate in Kazakhstan does not promote lending to the agriculture sector. Commercial credit is not readily available because banks are reluctant to lend money to agricultural producers as they consider the agricultural sector to be high risk. Other obstacles are high interest rates, short-term lending, and insufficient collateral. In this paper, micro-econometric analysis is used to analyze the determinants affecting access to credit. Results suggest the main determinants that predict whether an agricultural enterprise will be given credit are: i) the size of a farm, ii) the farm’s productivity, and iii) collateral.

Key words

Agricultural finance Crediting Micro-econometric analysis 

JEL Classification

G21 O16 Q 14 

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Copyright information

© Japan Economic Policy Association (JEPA) 2010

Authors and Affiliations

  • Sholpan Gaisina
    • 1
  1. 1.Department of ManagementInnovative University of EurasiaKazakhstan

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