Abstract

The main obstacle to the implementation of lending to agricultural enterprises is the high cost of credit. In our opinion, an adequate state agricultural policy should increase the interest of commercial banks in providing loans. In our opinion, it should be aimed at increasing the availability of bank loans for agricultural enterprises. For this purpose, it is advisable to partially compensate the payment of bank interest by agricultural enterprises. In the world practice in the banking sector, negative rates of return on deposits have found application. Commercial banks are able to borrow money at a discount rate. At the moment, there is a practice according to which the Central Bank has only one discount rate. In our opinion, there could be several discount rates at the same time. We hold the view that depending on the purposes to which the commercial bank directs the funds received from the Central Bank, the size of the Central Bank’s discount rate may be different and even have a negative value. We believe that the negative discount rate applied by the central bank for lending to commercial banks to continue providing loans for the purchase of agricultural machinery could encourage them to issue loans to agricultural enterprises. In our opinion, the use of a negative discount rate of the Central Bank in some cases may contribute to the realization of the bank’s credit potential and enhance its lending activities.

Highlights

  • Through credit, temporarily available funds of households, the state and enterprises are converted into loan capital, which banks transfer for temporary use for a certain fee

  • As a result of these innovations, manufacturers of agricultural machinery received new orders, agricultural enterprises were able to purchase new high-performance equipment on credit on favorable terms, and food production increased, both for domestic consumption and for export sales. This led to an increase in budget revenues, a decrease in food imports and an increase in their production, and commercial banks were able to realize their credit potential

  • Lending to agricultural enterprises allows the use of temporarily available funds to meet the needs of agricultural producers in the need for temporary financial resources, at all stages of the production cycle

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Summary

Introduction

Temporarily available funds of households, the state and enterprises are converted into loan capital, which banks transfer for temporary use for a certain fee. The movement of capital between sectors of the economy is carried out through the movement of money. Credit in a market economy ensures the migration of capital between sectors of the economy and affects the rate of return in these industries. Credit is an important component of investment processes that take place in the real sector of the economy. According to [1], the scale and level of investment activity of enterprises are the main factors that ensure the pace of economic development and the growth of its efficiency and competitiveness, as well as its development in the future. According to [2]in the process of redistribution of funds between sectors of the economy, investment lending plays an important role. According to [3], effective management of credit operations of a commercial bank requires a balanced credit policy that would provide for the priorities and goals of banking activities, as well as methods and means of their implementation

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