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The Determinants of Polish Farmers' Credit Interest Rates: Hedonic Price Analysis and Implications for Government Policy

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  • Petrick, Martin
  • Latruffe, Laure

Abstract

Our micro-econometric analysis of agricultural credit market outcomes in Poland sheds new light on the relationship between contractual arrangements and interest rates. An innovative theoretical framework based on a hedonic market model is developed. We interpret the factors that influence interest rates as "quality" components of the credit contract. We use unique data including detailed information about Polish farmers' credit contracts. Both nominal interest rates and bank fees are considered. Results show that banks prefer liquid types of collateral, and care little about the loan's purpose. The effect of government subsidies on interest rates is small compared to the officially declared reduction of the nominal rate.

Suggested Citation

  • Petrick, Martin & Latruffe, Laure, 2005. "The Determinants of Polish Farmers' Credit Interest Rates: Hedonic Price Analysis and Implications for Government Policy," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24757, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaae05:24757
    DOI: 10.22004/ag.econ.24757
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