Financial instruments and EU community policies

Michal Soliwoda, Jacek Kulawik and Barbara Wieliczko

Village and Agriculture (Wieś i Rolnictwo), 2018, vol. 180, issue 3

Abstract: Budget problems in the EU, resulting from increasingly complex geopolitical and socio-demographic conditions, may significantly prolong work on the financial perspective after 2020. In this context, the view is increasingly being formulated that in the future grant financing should be limited in favor of expanding the use of repayable instruments. The main goal of the article was to provide a theoretical justification for intervention, with a special case of credit/financial interventionism. This problem is referred to cohesion policy, although the possibilities of adaptation to the common agricultural policy have been indicated. The axis of the considerations is the thesis that the introduction of financial instruments to Community policies, including the CAP, should be based on solid theoretical premises, with reference to empirical and application research (even from the SME sector), identifying disadvantages, advantages, problems and threats. The imperfections and incompleteness of financial markets are a certain justification for prudent and time-based public intervention in shaping the supply of financial instruments, but the estimates of demand for them are very uncertain, falling within unacceptably wide ranges, which even suggests the possibility of overestimating them. The limited demand for the above instruments also results from the review of their use. What is no less important, the administrative and transaction costs can sometimes be very significant in their case, which can make them even less attractive than fully commercial financing. There is also no certainty that financial instruments will become widely available to all farmers and rural residents.

Keywords: Financial; Economics (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:ags:polvaa:344526

DOI: 10.22004/ag.econ.344526

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