Changing role of banking sector on financing farms in Turkey: Case of Adana province

To conduct this study, the data was collected from 91 agricultural enterprises within plain areas in the municipality of Adana and from 20 bank managers working in agricultural loan banks. The purpose of the study is to define the financial conditions of agricultural enterprises as well as the position and role of private banks--which have significant market share in agricultural loans today, while until the economic crisis of 2001 they had only a small share in agricultural loans for agricultural enterprises--and to identify the financing choices of agricultural enterprises. After conducting a socio-economic analysis for enterprises, the loan-use behavior of enterprises was examined. As a result of the analysis, it was concluded that private banks have increased their focus in agriculture, product and service diversity increased while the dominancy of money lenders decreased with the increase in loan diversity, and the relationship between producers and bank has changed. Together with these changes, the agricultural environment is dominated by more rational and competitive enterprises. Based on the data, 66.11% of the enterprises surveyed within the context of the study were indebted to T.C. Ziraat Bank while 32.20% and 1.69% of them were indebted to private banks and other public banks, respectively. For agricultural producers, a favorable interest rate is the main reason for choosing T.C. Ziraat Bank. Producers select private banks due to the subtle bureaucratic processes and personalized banking services. As a result of analysis performed in order to define the relationships among the economic characteristics of enterprises and their loan-use behavior, there is a negative correlation among loan usage, non-operating agricultural service revenue and livestock capital, whereas a positive correlation is found between the economic variables directly related with enterprise size and the use of the loan. Together with the increase in private banks' market share in agricultural loans, particularly with respect to agricultural financing, the competitive environment in the banking sector should provide continuity in production, thereby increasing product efficiency and agricultural investment. The government's agricultural loan policies should include structural implementations to promote quality production and agricultural development.