Where is it more advantageous to take a loan: comparison of interest rates in Azerbaijan and neighboring countries

"The banking sector of Azerbaijan is ahead of several countries in the region in terms of banking instruments, professional management, and financial capabilities".

This was stated by the chairman of the Azerbaijan Society of Appraisers (ASA) Vugar Oruj in his comment for BAKU.WS, conducting a comparative analysis of the banking systems of neighboring countries.

According to him, in each of Azerbaijan's neighboring countries - Georgia, Armenia, Iran, Russia, and Turkey - the level of development of the banking sector differs. However, in terms of financial instruments, customer base, and banks' approach to activities, the banking system of Azerbaijan occupies a prominent position in the region.

Vugar Oruj noted that currently in Azerbaijan, business loans range from 13-19 percent, and consumer loans are within 20-28 percent.

In Georgia, business loans are 11-16 percent, and consumer loans are about 16-25 percent. In Armenia, interest rates on business loans are similar to Georgian ones, but consumer loans are cheaper - in the range of 15-20 percent. The expert attributes this to the weakness of the country's economy and low demand for loans.

"As for Iran, the devaluation of the national currency seriously affects credit rates. Thus, in Iran, business loans fluctuate between 20-35 percent, and consumer loans between 25-40 percent. In Russia, the average rate for business loans is about 20 percent, and consumer loans are 25-30 percent.

Turkey stands out in the region in this regard. Against the background of a high discount rate, business loans vary in the range of 40-45 percent, and consumer loans in the range of 30-50 percent," added the chairman of ASA.

According to Vugar Oruj, the current level of credit rates shows that Azerbaijan is a developing economy: "Although further reduction of rates is difficult, if it becomes possible, it could provide a serious stimulus to the growth of economic activity."

Orkhan Huseyn