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Contractual relations in agricultural credit markets : a hedonic pricing approach with application to Poland

Author

Listed:
  • Martin Petrick

    (IAMO - Leibniz Institute of Agricultural Development in Central and Eastern Europe)

  • Laure Latruffe

    (Économie et Sociologie Rurales - INRA - Institut National de la Recherche Agronomique)

Abstract

We present a micro-econometric analysis of agricultural credit market outcomes in Poland that investigates 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. Using unique data allows us to consider both nominal interest rates and additional bank fees. The results show that banks have preferences for particularly liquid types of collateral, whereas they care little about the purpose for which the loan is used. Furthermore, the analysis allows quantification of the effects of socioeconomic attributes of farmers, different lending sources and government subsidies on interest rates. The latter effect is small compared with the officially declared reduction of the nominal interest rate. A simulation shows that enabling more borrowers to use liquid forms of collateral implies lower rates than those obtained by participating in the subsidy programme.

Suggested Citation

  • Martin Petrick & Laure Latruffe, 2006. "Contractual relations in agricultural credit markets : a hedonic pricing approach with application to Poland," Post-Print hal-02392191, HAL.
    • Handle: RePEc:hal:journl:hal-02392191
    DOI: 10.1111/j.1477-9552.2006.00031.x
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    Cited by:

    1. Petrick, Martin & Kloss, Mathias, "undated". "Identifying Factor Productivity from Micro-data: The case of EU agriculture," Working papers 144004, Factor Markets, Centre for European Policy Studies.
    2. Waseem AHMAD* & Tanvir AHMED** & Bashir AHMAD***, 2017. "HEDONIC PRICING OF MILK AT RETAIL LEVEL: A Case of Faisalabad, Pakistan," Pakistan Journal of Applied Economics, Applied Economics Research Centre, vol. 27(1), pages 29-39.
    3. Petrick, Martin, 2008. "Theoretical and methodological topics in the institutional economics of European agriculture. With applications to farm organisation and rural credit arrangements," Studies on the Agricultural and Food Sector in Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 45, number 92318.
    4. Myyrä, Sami, & Pietola, Kyosti & Heikkilä, Anna-Maija, 2011. "Farm Level Capital: Capital positions, structures, the dynamics of farm level investments, capital accumulation and leverage positions," Factor Markets Working Papers 105, Centre for European Policy Studies.
    5. Gramzow, Andreas, 2006. "Endogenous Initiatives As A Chance To Improve Rural Livelihood? Results Of A Case Study In Baltow, South-Eastern Poland," IAMO Discussion Papers 14900, Institute of Agricultural Development in Transition Economies (IAMO).
    6. Petrick, Martin & Kloss, Mathias, 2018. "Identifying Agricultural Factor Productivity from Micro-data: A Review of Approaches with an Application to EU Countries," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 67(2), pages 67-79.
    7. Dries, Liesbeth & Swinnen, Johan F.M., 2010. "The impact of interfirm relationships on investment: Evidence from the Polish dairy sector," Food Policy, Elsevier, vol. 35(2), pages 121-129, April.
    8. Hedman Jansson, Kristina & Huisman, Chelsey Jo & Lagerkvist, Carl Johan & Rabinowicz, Ewa, "undated". "Agricultural Credit Market Institutions: A Comparison of Selected European Countries," Working papers 144003, Factor Markets, Centre for European Policy Studies.

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