engleski

MICROCREDITING AS AN INCENTIVE FOR RURAL FARM DEVELOPMENT

The goal of this research is to prove the importance and need to meet the legislative framework for microcrediting that exists in countries of European union, as well as in countries of southeast Europe. The primary research was done on 1100 examinees in Bosnia and Herzegovina published in research paper titled „Readiness to secure loans for entrepreneurs“. As the access to banking system of BiH is similar to Croatia, less than 40% of mature workforce meets the bank terms for securing loans. Introduction of microcredit institutions on financial institutions' market is becoming "conditio sine qua non" for the development of small family farms, as well as for the whole economy of a nation. The analysis of results indicates the majority of unemployed and retired population cannot access bank loans, while they can secure such funds through microcredit institutions. This way of financing is extremely important for rural areas where farmers do not have steady monthly incomes, making them incapable to secure loans for themselves. The self-employment project through microcrediting organisations contributes the self-employment of unemployed population, improving and raising standards of independent farmers that do not have an access to the banking system. The contribution of this model of financing is in theoretical and practical preposition of self-employment that lowers the unemployment rate, raises living standards, and accumulates new funds for the government and local entities through taxes and contributions. The implementation of laws and business activities of microcredit organisation does not require any funds from the government budget, that is, it is not a burden or a cost for the state. The biggest obstacle is the population that is not well-informed on alternative means of financing their own business projects, other than bank loans. Furthermore, the scepticism of examinees represents a new type of institution that does not have a long tradition, which is one of the basic conditions when choosing its own credit institution.

Banks; rural farms; microcrediting; development

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