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55 Economic and Social Development, International Scientific Conference on Economic and Social Development 539 (2020)
Problems of the Impact of the Economy of Bank Loans on the Development of the Non-Oil Sector

handle is hein.intyb/ecosdmw0056 and id is 3010 raw text is: 55th International Scientific Conference on Economic and Social Development - Baku, 18-19 June, 2020 PROBLEMS OF THE IMPACT OF THE ECONOMY OF BANK LOANS ON THE DEVELOPMENT OF THE NON-OIL SECTOR Fikret Yusifov Associate professor at Department of Economics and Business Administration, Azerbaijan State University of Economics (UNEC), Azerbaijan ABSTRACT Today, one of the most serious problems of most oil-producing countries is to minimize the dependence of the economy on oil. To reduce the dependence of the economy of all spheres on oil, the governments of these countries are taking steps to ensure superior development of the real sector. However, studies show that in some oil countries, although these goals have been set for many years, they are practically impossible to achieve. In developing countries, there are a number of reasons that impede the superior development of the real economy of these countries. And, if one of the conditions for solving this problem is the creation of a real business environment by the state, then another condition is to ensure the availability of financial resources for business. That is, if both of these conditions are met at a time, it will be possible to ensure superior development of the real sector. But, as research shows, it is almost impossible to witness cases of compliance with both of these conditions at a time in either of the developing countries. The main goal of the article is to analyze the role of bank loans in the business environment existing in Azerbaijan. Our main responsibility in this article is to determine the impact of bank loans directed to the real sector of the economy on GDP growth, including on GDP related to the non-oil sector. For this, ergometric modeling was used during the study. The study revealed that if the structure of general lending is not fundamentally changed, the impact of bank loans on the development of the country's economy will not be able to exceed the lower level. In addition, the primary problem that hampers the change in the existing lending system in favor of the real sector is that the level of annual interest rates on loans often exceeds the level of profitability in the real sector by up to two times. Another problem is that loans to the real sector are short-termed. Through our research, we offer an optimized option for the terms and interest rates of loans issued to the real sector. Keywords: Lending, Interest rates for bank loans, Annual interest rate, Non-oil sector, Real sector 1. INTRODUCTION The dependence of the economy on resources, as a rule, does not allow it to develop in a balanced way. The light money coming into the country from the sale of resources, ultimately leads to an unjustified appreciation of national currencies and the collapse of a competitive environment for the development of other sectors of the economy. However, this does not happen in all cases. Another experience shows that some countries with large resources have achieved substantial economic growth by skillfully using them. Countries such as the United States, Canada, Norway and Malaysia are examples of this. In other countries, the situation is quite different. For example, Saudi Arabia can balance its budget normally, while oil prices on world markets are $ 80-85 per barrel. Russia and Azerbaijan feel comfortable with oil at $ 60 a barrel. Even worse is the situation in oil countries such as Venezuela and Nigeria. This is not to say that these countries are doing nothing to make their economies dependent on oil. For example, in early 2016, Saudi Arabia set out a plan for structural reforms in the economy until 2030; although they said, By 2020, we will live without oil, today Saudi Arabia's economy is dependent on oil. The resource countries were also the countries that suffered the most from the impact of the coronavirus pandemic on the world economy. 539