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The effectiveness of credits granted by the Agricultural Bank on investment and employment in the agricultural sector

Number of pages: 106 File Format: word File Code: 30352
Year: 2013 University Degree: Master's degree Category: Management
Tags/Keywords: added value - Bank credit - employment - Investment
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  • Summary of The effectiveness of credits granted by the Agricultural Bank on investment and employment in the agricultural sector

    Department of Business Administration

    Dissertation for Master Degree (M.A)

    Abstract:

    One of the most important stages of the planning process is the evaluation of plans and programs. This process helps to optimize the decisions and finally to the feasibility and realism of the plans. Evaluation can be considered as an important factor in improving the effectiveness and correcting the weaknesses of development programs and increasing monitoring. Optimum use of available resources and facilities in order to meet human needs and desires, including increasing production, income, employment, community welfare, etc. It is considered one of the most important development goals of any country. For this purpose, it is usually tried to achieve this goal by applying policies and various executive tools in development programs.

    The role of institutions that provide development credits is very important in this case. These inputs such as banks, cooperatives, charitable loan funds, informal sources and so on. It has a direct role in solving these problems. In the current research, the role of the Agricultural Bank, which is the most important supplier of credits to the agricultural sector, is investigated. With this attitude towards the agricultural sector and the use of time series statistics and using spss software, this issue was investigated and the results showed that the facilities granted by the Agricultural Bank have a positive effect on employment, investment and the amount of added value of the agricultural sector in Gilan province. Therefore, by using the appropriate credit system, it is possible to develop job opportunities in this sector. Key words: bank credit, employment, investment, added value 1 Introduction: The most important issue that always occupies the minds of the country's planners is to be able to estimate the role and amount of capital required to achieve the desired goals in the economic sectors. In this way, they can allocate the available limited resources between economic activities. Due to the limitation of government funds and bank facilities to equip capital resources, different economic sectors of the country compete with each other to attract these resources. The most important factor of competition between economic activities to attract capital is the profitability of that sector. Now, if the profitability factor of the company is used as the only tool for allocating capital resources, in this case, the activities of the agricultural sector, due to the spread of agricultural fields and the distance of farmers from urban information and facilities, in the short term, they are considered as low-yield activities and cannot obtain the required capital. The continuation of this situation of development of rural and agricultural areas endangers food production in the long term (Amini and colleagues, 2017).

    In order to overcome this problem, in all developed countries and many developing countries, the governments have committed themselves to support the agricultural sector. In these countries, the allocation of capital resources to the agricultural sector is done through planning. In this way, long-term profit, increasing food supply and reducing the risks of malnutrition and the threat to the country's food security. In our country, the government, realizing the importance of the agricultural sector and the need to support this sector, has tried to support this sector in various ways in the form of budgets and bank loans. Among these aids, we can mention the allocation of 25% of the banking system's credits to the agricultural sector in the third and fourth programs of economic and social development. But in practice, this sector has not been able to use all these capacities and achieve the desired goals. Therefore, knowing the extent and manner of the effect of bank credits and government budget on the economic growth and development of the agricultural sector is essential. In this way, the statesmen can formulate development plans for the sector and allocate the required credits with appropriate information (Amini et al., 1377).

    1-2 statement of the problem:

    Employment and getting people to the desired job is considered one of the most basic needs of a society (Kerbasi et al., 1387). Employment can be considered in terms of importance in the practical aspects of human personality, the source of identity and the means to reach the happiness of mankind. And in philosophical, religious, psychological and political aspects, useful and fruitful work is very important..  In general, in recent years, providing employment and reducing the unemployment rate, in the form of one of the economic concerns and as the most necessary goal for the country's management and economic programs, has been considered first at the level of organizing the country and also in economic, social and cultural programs (Taibi et al., 2019). Employment and its amount, like any economic and social variable, is affected by various factors, including the amount of production, the amount of investment, the level of prices, monetary policies, financial policies and so on. pointed out (Bakhtiari and Pasban, 2013).  Studies show that among these factors, unemployment can be reduced and productivity can be increased only through increasing investment (Keshavarzian Paishati and Ziaei Begdali, 2015).

    Lack of capital and how it is allocated between economic activities are among the obstacles and problems plaguing developing countries to achieve economic growth and development. Proponents of the "unbalanced economic growth" theory believe that due to the lack of capital, especially in developing countries, it is not possible to invest simultaneously in all economic activities. As a result, investment should be made in some activities that have a more fundamental role in advancing the economy (Mehrgan, 1371).

    Among the investments in different economic sectors, investment in the agricultural sector has a special importance and position (Amini and Falihi, 1377). So that the significant contribution of this sector in the economic growth of the country, despite the decrease in its share of the capital balance compared to other sectors, has caused many policymakers to believe that this sector can be a suitable place to create employment (Khaldi and Hachit Nejad Shirazi, 2016). In the agricultural sector, the supply of funds for investment comes from three sources: farmers' savings, bank facilities, and the government's general budget. Among these three sources, the granting of bank facilities is of particular importance (Bakhtiari and Pasban, 2013).

    Bank facilities and credits in the agricultural sector are types of directed credits that are granted to individuals with the aim of expanding and growing agricultural production. Credits are necessary for development and provide the capital needed by farmers and entrepreneurs for new investments or the adoption of new technologies.

    Farmers without receiving bank facilities can hardly equip enough capital for production. For this purpose, in all countries, special facilities are considered for farmers to increase investment in the agricultural sector. This facility includes the ease of receiving bank loans for the agricultural sector compared to other sectors and paying a part of the bank interest on the loans. In this way, they provide the necessary incentives to increase investment in the agricultural sector (Ghorbani, 2016). For this purpose, the present study investigates the effects of the allocation of the Bank of Agriculture facilities on the process of job creation and investment in Gilan province. And it is trying to introduce a model to estimate the impact of credits granted by the Agricultural Bank on investment and employment by using economic theories and experimental work done in the agricultural sector. For this purpose, variables such as the added value of the agricultural sector, investment in the agricultural sector and employment in the agricultural sector have been used.

    1-3 The importance of the topic and the motivation for choosing it:

    Unemployment is one of the biggest unpleasant consequences in underdeveloped and developing countries, which on the one hand, appears as a problem caused by underdevelopment and on the other hand, as a big obstacle. It stands in the way of development and becomes the beginning of many economic, social and cultural problems and anomalies. The high rate of unemployment in our country has caused the government to put the recognition of job opportunities as the priority and goal of development programs (Houshmand, 2010, 379). The growth of the population and the increase of the workforce against its demand has led to the limitation of job opportunities in the society and the increase of unemployment. The lack of capital and how to allocate it between economic activities is one of the obstacles and problems that plague developing countries to achieve economic growth and development. In order to make the country's economic system more efficient, various options are proposed, and economic support for producers is one of these. Investment in the agricultural sector, due to the continuous increase in the demand for food and other agricultural products, can cause the growth of production and employment in this sector. In fact, the increase in demand causes the price level to rise, and the increase in the price level increases the motivation for investment.

  • Contents & References of The effectiveness of credits granted by the Agricultural Bank on investment and employment in the agricultural sector

    List:

    Chapter One: General research. 12

    1-1 Introduction: 13

    1-2 Statement of the problem: 14

    1-3 The importance of the topic and the motivation for choosing it: 16

    1-4 Research objectives: 17

    1-5 Research hypotheses: 17

    1-6 Information gathering tools: 18

    1-7 Analysis method Information analysis: 18

    1-8 research area: 19

    1-8-1 thematic area: 19

    1-9-2 spatial area: 19

    1-9-3 time area: 19

    Chapter two: subject literature and research background. 20

    2-1 Introduction: 21

    2-2 The importance of the agricultural sector in the economy of countries: 22

    2-3 The agricultural sector in Iran: 24

    2-3-1 The share of the agricultural sector in the gross domestic product: 25

    2-3-2 The share of the agricultural sector in exports: 27

    2-3-3 Employment creation: 28

    2-3-4 Food security and food supply for the people of society: 30

    2-4 Factors affecting the production capacity of the agricultural sector: 31

    2-5 Problems and bottlenecks in the development of the agricultural sector in Iran: 34

    2-6 Concept of employment: 38

    2-6-1 Economic growth and employment: 38

    2-6-2 Programs and policies for creating employment: 40

    2-7 Employment in the agricultural sector: 45

    2-8 Banks and their duties in the country's economy: 48

    2-9 Agricultural Bank: 50

    2-10 Definition of credits and credits: 51

    2-11 Sources of credit for the agricultural sector: 53

    2-12 Importance of credits in creating Employment: 56

    2-13 The role of capital in production: 57

    2-14 Factors affecting investment in the agricultural sector: 58

    Research background: 60

    Chapter three: Research method. 68

    3-1 Introduction: 69

    3-2 Population and statistical sample: 69

    3-3 Research method and data collection method: 70

    3-4 Data analysis method: 72

    3-4-1 Pearson correlation coefficient test: 73

    3-4-2 Kolmogorov test Smirnov (K-S): 73

    Chapter Four: Data Analysis 75

    4-1 Introduction: 76

    4-2 Descriptive Statistics: 76

    4-2-1 Variable Amount of Loans Granted by the Agricultural Bank to the Agricultural Sector: 77

    4-2-2 Variable Amount of Investment: 78

    4-2-3 Employment rate variable: 79

    4-2-4 Value-added variable: 80

    4-3 Normality test: 81

    4-4 Hypothesis test: 83

    4-4-1 Review of the first hypothesis test: 84

    4-4-2 Review of the second hypothesis test: 85

    4-4-3 Review of the third hypothesis test: 86

    Chapter five: conclusions and suggestions. 87

    5-1 Summary of the results: 89

    5-1-1 Analysis of the findings: 89

    5-1-2 Results in relation to the research objectives: 89

    5-1-3 Results based on the research hypotheses: 90

    5-3 Research limitations: 94

    5-4 Research suggestions: 95

    Sources and reference: 97

    Appendix: 102

    Source:

    Sources and reference:

    Persian sources

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    Khaldi, Kohsar, Hakitnejad Shirazi, Andisheh, (2016), "Criticism of the policy of increasing employment in Iran's agricultural sector with emphasis on the fourth development plan", Development and Productivity Journal, 2nd year, 6th issue,"An Introduction to Research Methodology in Humanities", twelfth edition, Tehran: Organization for the Study and Compilation of Humanities Textbooks of Universities (SAT)

    Hakimipour, Nader and Alireza Karimi (2013), "Performance of Iran's agricultural sector in the three five-year development plans after the revolution and the major improvements of this sector", Research Quarterly of Agricultural Bank, Faravand Publishing House, Number 4

    Khaldi, Kohsar, Hakitnejad Shirazi, Andisheh, (1386), "Criticism of the policy of increasing employment in Iran's agricultural sector with an emphasis on the fourth development plan", Tehsehan and Productivity Journal, second year, number six, pages 39-48.

    Duro, Stephen and others(1372), credit and savings for development, translated by Alireza Jamidi

    Refat, Betoul, Beikzadeh, Saeed, (1391), "Using the model of simultaneous equations of panel data in role analysis Economic Integration of Eco on Growth and Employment", Scientific and Research Quarterly of Economic Growth and Development Research", Year 2, Number 20, 22-9.

    Zare, Ahmed, (1377) "Investigation and evaluation of the productive effects of credits allocated to the agricultural sector by national and agricultural banks", Master's Thesis, Tarbiat Modares University.

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    Agricultural Bank website, www.agri-bank.com

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    Shakri, Abbas and Mir Hossein Mousavi (2012), "Investigation of factors affecting private and government investment in the agricultural sector", scientific-research quarterly Agricultural Economics and Development, Commercial Publishing, No. 44-43.

    Sadr, Kazem (2012). "Measuring the effect of credits on the added value of the agricultural sector", collection of articles of the conference on financing agriculture, experiences and lessons, Tarbiat Modares University Economics Research Institute, pp. 23-36.

    Talib, Mehdi (1372), Rural Credits in Iran, Ministry of Jihad Extension, Tehran.

    Taibi, Seyed Kamil, Shatei, Mehsa, Samimi, Parisa, (1389), "Effect of Facilitation" Banki on job creation in Iran's economic sectors", Money and Economy Quarterly, No. 4, pages 1-33.

    Azizi, Jafar, 2016, "Agricultural Economy", Rasht Branch Islamic Azad University

    Alizadeh Janosilo, Mohammad Reza, (2018), "Investigation of Private Sector Investment Behavior in Iran's Agricultural Sector", Master's Thesis, Shahid Beheshti University, Tehran.

    Farzin Motamed, Arghvan (1384), "Investigation of the effectiveness of agricultural bank credits on investment and employment in the agricultural sector", Master's thesis, Islamic Azad University, Science and Research Unit.

    Ghorbani, Ahmad, (1386), "Estimating the effect of bank credits and government budgets on agricultural production", the 6th Iran Agricultural Economics Conference.

    Qavam, Hassan (1371), Research on agricultural credits in Iran, Master's thesis, University Tehran

    Keshavarzian Paishati, Akbar, Ziyai Bigdali, Mohammad Taghi, (2016), "The Role of Bank Facilities in Private Investment in Iran", Journal: Ekhtosad, "Economic Research", Number 21, Pages 229-264.

    Karbasi, Alireza, Ezni Ashri, Hajar, Aqil, Hassan, (2017), "Employment Forecast in the Agricultural Sector in Iran", Journal of Economics in Agricultural Development (Agricultural Sciences and Industries), Volume 22, Number 2, Pages 31 to 43. Kopahi, Majid; Principles of Agricultural Economics, 4th edition, 1369, Publishing and Printing Institute of Tehran University.

    Malek Mohammadi, Iraj;  Masoumeh Shamshad and Gholam Hossein Hosseininia, (2013), "Identification and analysis of factors affecting employment generation in natural resource cooperatives of Golestan province", Human Geography Research, No. 79, pp. 156-141.

    Manthar Zahor, Mahmoud; Economics, 7th edition, Publishing and Printing Institute of Tehran University, 1372.

    Mehrgan, Nader, (1371), "Investment Developments in the Agricultural Sector", Journal of Political and Economic Information, No. 61 and 62.

    Walizadeh, Abol Mohsen; Rajabi Jahrodi, Mahmoud. "Investigation of the impact of lowering the bank interest rate on investment", Proceedings of the 12th Monetary and Exchange Policy Seminar, Central Bank of the Islamic Republic of Iran, 1381, pp. 494-503

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    English sources:

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    Bbaboucek, Ivan and M. Jancar (2005). "Effects of Macroeconomic Shock to the Quality of the Aggregate Loan Portfolio", Czech National Bank, Working Paper Series, No. 1, pp. 1-62.

    Burges, Robin and Rohini Pande (2002), Do rural banks matter?

    Evidence from the Indian Social Banking experiment, March, Internet.

The effectiveness of credits granted by the Agricultural Bank on investment and employment in the agricultural sector
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