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Finance and Credit
 

RETRACTED: Consumer lending of population of Azerbaijan at the present stage

Retraction reason: Redundant publication. The author/contributor list has been changed.
The article retraction was innitiated by the journal editor.
Retraction date September 25, 2019

Ретракция

Vol. 21, Iss. 1, JANUARY 2015

PDF  Article PDF Version

Available online: 8 January 2015

Subject Heading: Foreign experience

JEL Classification: 

Pages: 63-68

Guseinov E.N. Azerbaijan State University of Economics, Baku, Azerbaijan
sesiya@rambler.ru

Consumer lending is important for solving social tasks. Creditors of consumer lending can be banks, non-bank credit organizations, trade companies, building societies, citizens, rental agencies, as well as enterprises where people work. Before a bank issues a consumer loan, in most cases a credit officer would offer the customer to transfer the information included in the signed loan agreement and the conditions to one of credit bureaus that accumulate data on credit history of borrowers. The aim of this study is to review the current state of consumer lending in Azerbaijan, identify its pros and cons, and basic development trends. In practice, banks issue consumer loans to the public against the balance in customer deposit account. Typically, these are small sums for the purchase of household appliances, furniture purchase or repairs. The deposit amount shall be minimum 75% of the cost of purchased goods. This testifies to the fact that the amount of bank deposits has an impact on the volumes of bank consumer lending. Another problem of developing mortgage lending in the Republic is high cost of loans. It entails significant monthly payments, which may be hundreds and thousands of manats a month depending on the size and terms of loans. As a result, the actual cost of a flat or a house paid by a borrower increases significantly. Foreign sources of financing are very expensive in Azerbaijan due to high risk of non-residents investing in the economy. This determines high credit rates for the end-use borrower. In addition, different mortgage schemes imply the use of subsidies on certain loans. A characteristic feature of local mortgage is that if it develops as a normal financial business, there is a clear social orientation at the local level, i.e. regional authorities undertake significant part of the burden in allocating a loan credit. Therefore, mortgage loans are often with indefinite maturity. This trend complicates the development of this form of lending at market rates. The author concludes that it is necessary to further develop and perfect credit relations of commercial banks with the public based on domestic and foreign experience study.

Keywords: creditor, banking, business, credit agreement, limit, overdraft, commission, fee, credit program

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