EconPapers    
Economics at your fingertips  
 

Agricultural Credit Market Institutions: A Comparison of Selected European Countries

Kristina Hedman Jansson, Jo Huisman Chelsey, Carl Johan Lagerkvist and Ewa Rabinowicz

No 143, Factor Markets Working Papers from Centre for European Policy Studies

Abstract: In this paper, we describe and compare the institutional framework of the agricultural credit markets in selected European countries. The institutions can be both formal (rules, regulations, authorities and actors) and informal (norms, values and relations). They also interact and in a situation where the formal institutions are weak, the informal ones increase in importance. The study is based on a questionnaire sent to agricultural financial experts in selected countries. The case studies show that credit regulations are typically general, with no specific regulations for the agricultural credit market. On the other hand, several countries support agricultural credit in various forms, implying that the governments do not perceive the general credit market to function in the case of agricultural firms. In a risk assessment, the most frequent reasons for rejecting a loan application are all linked to economic performance and the situation of the farmer. Personal characteristics, such as educational level or lack of experience, were generally perceived as less influential. Another interesting point when it comes to risk assessment is that in some countries the importance of asset-based lending compared with cash flow-based lending seems to differ when concerning a first-time applicant and when there is an application to extend a loan. To get an idea of the availability of credit, the loan-to-value (LTV) ratio was calculated, and it showed remarkably low values for Poland and Slovakia. For all the countries, the calculated value was lower than what the financial experts would have expected. This might imply credit rationing in agriculture in some of the countries studied. At the same time, the financial experts all judged the possibility of an agricultural firm obtaining a loan as higher than that for other small rural firms, implying that the latter are also credit-rationed.

Pages: 30 pages
Date: 2013-01
New Economics Papers: this item is included in nep-agr and nep-ban
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

Downloads: (external link)
http://www.factormarkets.eu/system/files/FM%20WP33 ... t%20Institutions.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 503 Service unavailable

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eps:fmwppr:143

Access Statistics for this paper

More papers in Factor Markets Working Papers from Centre for European Policy Studies Contact information at EDIRC.
Bibliographic data for series maintained by Eleni Kaditi ().

 
Page updated 2021-01-22
Handle: RePEc:eps:fmwppr:143