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Abstract
The paper aims at studying the challenges of agricultural finance in Armenia. Strengthening the
rural credit markets and institutions in Armenia is of paramount importance. The study reviews
and analyzes the outcomes of the Agricultural Credit Club Program implemented by the US
Department of Agriculture Marketing Assistance Program in Armenia. The study identifies the
attitudes and perceptions of member farmers relating to the level of interest rates and access to
credit. The findings provided clear indications of the challenges facing the improvement or even
development of rural financial markets and agricultural credit institutions from the demand side
of agricultural credits. The study concentrates on several important issues like: problems with
loan collateralization in rural areas, land reform and property rights, transaction costs for
monitoring rural credits, the role of government in rural credit and finance markets, and the role
of specialized agricultural credit institutions like credit clubs. The research was based on surveys
and interviews. Surveys have been conducted among credit club members to identify and
measure the benefits of such a rural credit cooperative initiative. Based on findings, certain
recommendations have been proposed regarding the rural finance and credit mechanisms.