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Abstract
The first step of reforms directed towards the formation of a market structure in
Armenia was the privatisation of land, which started in February 1991 with the
adoption of the Land Code and the Law on Peasant and Peasant Collective
Household, and finished in April 1993 (Spoor, 2005). As a result of the land
privatisation, almost 333 thousand peasant farms were created in contrast to the
860 Soviet-type kolkhoz/sovkhozes before (CFOA, Armenia Country Paper, 2003,
Lerman and Mirzakhanian, 2001). Yet, the lack of adequate institutions,
particularly financial institutions, supporting productivity increasing agricultural
activities under private ownership, has remained one of the most serious deficits
(Spoor, 2005). With the transition, the government rightly stopped previous costly
programmes of directed agricultural credit. At the same time, Armenian
commercial banks apart from the Agricultural Cooperative Bank of Armenia
(ACBA), were not interested and had no experience in providing credit to smallscale
private farmers (Ministry of Agriculture of Armenia, 2002).
The paper is organised as follows: The theoretical link between social capital and
access to resources is discussed in Section 2. Section 3 presents the data and
methodology used in the analysis. The findings are summarized in Section 4 and
Section 5 concludes the paper.