A microeconometric analysis of credit rationing in the Polish farm sector

The objective of this paper is to investigate credit rationing of Polish farms. The analysis is based on cross-section survey data and motivated by a microeconomic farm household model. The results suggest that more than 40 per cent of borrowers experience pronounced credit rationing by rural banks. Credit-rationed households display an average marginal willingness to pay for short-term credit of 209 per cent net of principal. Furthermore, household variables have a significant effect on output supply. Demographic characteristics and a lack of collateral are major determinants of credit rationing. Public interest rate subsidisation contributes little to alleviate rationing of farms.