Functioning of the rural credit market in Poland : case studies of farmers and banks

The paper presents case studies of four banks and seven private farmers that were undertaken in May 2003 in Poland. The objective was to give insights into banks’ lending behaviour to agriculture, and into farmers’ borrowing and investment behaviour. The farmers interviewed did not report large investments and were not highly indebted. Farmers’ and banks’ interviews suggested that the presence of imperfections on the credit market were at the core of the issue. Farmers faced high costs during the loan process, and some were discouraged from applying. In addition, the case studies highlighted that it was not rare that applicants were totally or partially rationed. However, if functioning of the credit market seems to be a key issue for the Polish farming sector’s structural change, it is not the sole concern, as the studies showed that the lack of investment opportunities were also a major reason for low investment levels. Policies measures should therefore aim both at improving access to credit and developing investment opportunities for farmers