@article{Petrick:14905,
      recid = {14905},
      author = {Petrick, Martin and Latruffe, Laure},
      title = {CREDIT ACCESS AND BORROWING COSTS IN POLAND'S AGRICULTURAL  CREDIT MARKET: A HEDONIC PRICING APPROACH},
      address = {2003},
      number = {918-2016-72737},
      series = {IAMO Discussion Paper No. 46},
      pages = {31},
      year = {2003},
      abstract = {The paper empirically investigates credit access and  borrowing costs in Poland's rural financial market. We  conduct an econometric analysis based on cross-sectional  survey data including formal loans taken in the period  1997-1999. A hedonic regression of the effective interest  rate, comprising both the nominal interest rate and  additional transaction costs faced by farmers, allows the  identification of the determinants of borrowing costs.  These determinants can be interpreted as loan attributes  and their implicit prices calculated. We proceed in two  steps. In the first step, farmers' credit access is  estimated by a Probit model. The second step is the hedonic  regression, in which the Probit results are taken to test  for selectivity. The results support the widely held view  that formal lenders tend to discriminate against smaller  farms. They also suggest that the presence of devices to  screen and signal the quality of borrowers makes borrowing  more likely and reduces borrowing costs. Furthermore, the  analysis reveals that the choice of the type of bank has a  significant effect on borrowing costs. All other loan  attributes equal, the traditional institutions for  agricultural lending (the cooperative banks and the  governmentally controlled Bank for Food Economy) offer  between 1.1 and 1.3 percentage point higher effective  interest rates as compared with the most favourable terms  available, which has implications for a potential future  restructuring of the Polish rural banking sector. In  addition, there is strong evidence that the government  subsidisation of nominal interest rates is severely  counteracted by increased transaction costs and an adverse  selection of borrowers. However, there is still a net  reduction of the effective interest rate by 1.4 percentage  point on average, compared to non-subsidised loans. This  raises the question whether lending procedures under the  government programme are sufficiently streamlined and  whether loans are effectively targeted.},
      url = {http://ageconsearch.umn.edu/record/14905},
      doi = {https://doi.org/10.22004/ag.econ.14905},
}