Supporting Sustainable Financing and Access to Finance in Armenia

Supporting Sustainable Financing and Access to Finance in Armenia
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Volume/Issue: Volume 2023 Issue 004
Publication date: January 2023
ISBN: 9798400232305
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Topics covered in this book

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Exports and Imports , Finance , Economics- Macroeconomics , Economics / General , Inward FDI , access to finance , financial inclusion , face challenge , sustainable financing , inward foreign direct investment , financing in Armenia , Armenia's share , Foreign direct investment , Business environment , Capital inflows , Loans , Global , Europe , Middle East and Central Asia

Summary

In Armenia, both external and domestic financing face challenges. Armenia’s share of inward foreign direct investment (FDI) in private external financing has declined significantly over the past decade. Access to domestic finance in Armenia is also moderate and masks important disparities. Against this background, this paper analyses the determinants of inward FDI and examines the impediments to increasing access to domestic finance. The paper confirms empirically that governance-related structural factors have a significant impact on inward FDI. Similar structural factors, informality and poor accounting practices are reported among major challenges for increasing access to finance for firms in Armenia. This paper finds that to improve financing in Armenia include: implementing structural reforms to improve the business environment, maintaining prudent macroeconomic policies, strengthening financial reporting, and improving financial inclusion through reduced informality in the economy.