The Agriculture Sector in TRNC: An Examination of Financial Sources and Credit Policies of the Banking System

ABSTRACT: Historical experience shows that for decades, both developed and developing countries have tried to support the development of agricultural sector, a labour intensive sector providing employment and income for millions of farmers in these countries. The agricultural sector is a complementary sector, which supports the development of other sectors. North Cyprus has a developing small island economy and dominated by sectors including public, tourism, education, industry and agriculture sectors. Agriculture is a crucial sector for the North Cyprus economy requiring easy, adequate and low cost accessibility to financial services. Our study shows that the agricultural financing of TRNC are channelled through five banks named as Cyprus Turkish Cooperative Central Bank, T.C. Ziraat Bank, Creditwest Bank, Faisal Islamic Bank, and Development Bank of TRNC out of total 25 operating banks in 2011. The comparative analysis of the credit policies of these 5 banks shows that Cyprus Turkish Cooperative Central Bank as a cooperative bank and T.C. Ziraat Bank as a foreign branch bank are the two main banks contributing to the agriculture sector development by providing primarily agricultural banking products and services. The Development Bank of TRNC as a state bank focuses more on investment and development projects due to the establishment purpose of the bank. Within the Islamic Banking framework, Faisal Islamic Bank offers investment and agricultural loans aimed at promoting the economy. Creditwest Bank as a pure private commercial bank provides agricultural banking with the highest cost of loans in terms of interest rates. Keywords: North Cyprus, agricultural finance, banks, credit policies, economy. ……………………………………………………………………………………………………………………………………