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

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.agricultural finance, credit policy, hedonic regression, micro-econometrics, Poland, Agricultural and Food Policy, Financial Economics, Q12, Q14, P32,

Credit access and borrowing costs in Poland's agricultural credit market: a hedonic pricing approach

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. -- G E R M A N V E R S I O N: Gegenstand dieses Beitrags ist die empirische Untersuchung von Kreditzugang und Kreditkosten auf Polens ländlichen Finanzmärkten. Zu diesem Zweck wird eine ökonometrische Analyse von Querschnittsdaten durchgeführt, die Informationen zu formellen Kreditkontrakten für die Zeitperiode 1997-1999 beinhaltet. Mit Hilfe einer hedonischen Regression des effektiven Zinssatzes, der sowohl den nominalen Zinssatz als auch zusätzliche Transaktionskosten umfasst, werden die Determinanten der Kreditkosten analysiert. Diese Determinanten können als Krediteigenschaften interpretiert werden, was eine Berechnung ihrer impliziten Preise ermöglicht. Unser Vorgehen besteht aus zwei Schritten. Im ersten Schritt wird der Zugang zu Krediten durch ein Probit-Modell geschätzt. Der zweite Schritt beinhaltet die hedonische Regression, wobei die Probit-Ergebnisse für einen Selektivitäts-Test verwendet werden. Die Ergebnisse bestätigen die verbreitete Ansicht, dass formelle Kreditgeber kleinere landwirtschaftliche Betriebe tendenziell benachteiligen. Die Ergebnisse legen außerdem nahe, dass Verfahren zur Aufdeckung und Signalisierung der Nachfragerqualitäten die Kreditaufnahme wahrscheinlicher machen und die Kreditkosten senken. Die Analyse verdeutlicht, dass die Wahl der Bank einen signifikanten Effekt auf die Höhe der Kreditkosten hat. Bei sonst gleichen Vertragseigenschaften bieten die traditionellen landwirtschaftlichen Kreditgeber (die Genossenschaftsbanken und die von der Regierung kontrollierte Bank für Nahrungsmittelwirtschaft) um 1,1 bzw. 1,3 Prozentpunkte höhere effektive Zinssätze, verglichen mit dem günstigsten Angebot. Dies ist für eine künftige Restrukturierung des ländlichen Bankensektors in Polen von Bedeutung. Außerdem gibt es deutliche Hinweise darauf, dass die Wirkung der staatlichen Zinssubventionierung durch gesteigerte Transaktionskosten und adverse Selektion von Kreditnehmern stark verringert wird. Allerdings führt sie im Vergleich zu nichtsubventionierten Krediten immer noch zu einer Netto-Verringerung des effektiven Zinssatzes um durchschnittlich 1,4 Prozentpunkte. Es stellt sich daher die Frage, ob die Vergabeprozeduren des staatlichen Kreditprogramms hinreichend effizient sind und ob die Kredite effektiv plaziert werden.agricultural finance,credit policy,transaction costs,Poland,microeconometrics,Agrarfinanzierung,Kreditpolitik,Transaktionskosten,Polen,Mikroökonometrie

Semi-parametric estimation of the hazard function in a model with covariate measurement error

We consider a model where the failure hazard function, conditional on a covariate $Z$ is given by $R(t,\theta^0|Z)=\eta\_{\gamma^0}(t)f\_{\beta^0}(Z)$, with $\theta^0=(\beta^0,\gamma^0)^\top\in \mathbb{R}^{m+p}$. The baseline hazard function $\eta\_{\gamma^0}$ and relative risk $f\_{\beta^0}$ belong both to parametric families. The covariate $Z$ is measured through the error model $U=Z+\epsilon$ where $\epsilon$ is independent from $Z$, with known density $f\_\epsilon$. We observe a $n$-sample $(X\_i, D\_i, U\_i)$, $i=1,...,n$, where $X\_i$ is the minimum between the failure time and the censoring time, and $D\_i$ is the censoring indicator. We aim at estimating $\theta^0$ in presence of the unknown density $g$. Our estimation procedure based on least squares criterion provide two estimators. The first one minimizes an estimation of the least squares criterion where $g$ is estimated by density deconvolution. Its rate depends on the smoothnesses of $f\_\epsilon$ and $f\_\beta(z)$ as a function of $z$,. We derive sufficient conditions that ensure the $\sqrt{n}$-consistency. The second estimator is constructed under conditions ensuring that the least squares criterion can be directly estimated with the parametric rate. These estimators, deeply studied through examples are in particular $\sqrt{n}$-consistent and asymptotically Gaussian in the Cox model and in the excess risk model, whatever is $f\_\epsilon$

The impacts of climate change levy on business: evidence from microdata

We estimate the impacts of an energy tax – the Climate Change Levy (CCL) – on the manufacturing sector using panel data from the UK production census. Our identification strategy builds on the comparison of trends in outcomes between plants subject to the CCL and plants that were granted an 80% discount on the levy after joining a so-called Climate Change Agreement (CCA). Since the CCAs stipulate specific targets for energy usage or carbon emissions, this comparison yields a lower bound on the impact of the discount. To address a likely selection endogeneity in CCA participation, we adopt an IV approach that exploits exogenous variation in pollution discharges that determined eligibility for CCA participation. We find robust evidence that CCA participation had a strong positive impact on growth in both energy intensity and energy expenditures. An analysis of fuel choices at the plant level reveals that this effect is mainly driven by stronger growth in electricity use and translates into a positive impact on CO2 emissions. We do not find any statistically significant impacts of the tax on employment, gross output or total factor productivity. We conclude that, had the CCL been implemented at full rate for all businesses, further cuts in energy use of substantial magnitude could have been achieved without jeopardizing economic performance

The Impacts of the Climate Change Levy on Manufacturing: Evidence from Microdata

We estimate the impacts of the Climate Change Levy (CCL) on manufacturing plants using panel data from the UK production census. Our identification strategy builds on the comparison of outcomes between plants subject to the CCL and plants that were granted an 80% discount on the levy after joining a Climate Change Agreement (CCA). Exploiting exogenous variation in eligibility for CCA participation, we find that the CCL had a strong negative impact on energy intensity and electricity use. We cannot reject the hypothesis that the tax had no detrimental effects on economic performance and on plant exit.

Credit access and borrowing costs in Poland's agricultural credit market: a hedonic pricing approach

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.Gegenstand dieses Beitrags ist die empirische Untersuchung von Kreditzugang und Kreditkosten auf Polens ländlichen Finanzmärkten. Zu diesem Zweck wird eine ökonometrische Analyse von Querschnittsdaten durchgeführt, die Informationen zu formellen Kreditkontrakten für die Zeitperiode 1997-1999 beinhaltet. Mit Hilfe einer hedonischen Regression des effektiven Zinssatzes, der sowohl den nominalen Zinssatz als auch zusätzliche Transaktionskosten umfasst, werden die Determinanten der Kreditkosten analysiert. Diese Determinanten können als Krediteigenschaften interpretiert werden, was eine Berechnung ihrer impliziten Preise ermöglicht. Unser Vorgehen besteht aus zwei Schritten. Im ersten Schritt wird der Zugang zu Krediten durch ein Probit-Modell geschätzt. Der zweite Schritt beinhaltet die hedonische Regression, wobei die Probit-Ergebnisse für einen Selektivitäts-Test verwendet werden. Die Ergebnisse bestätigen die verbreitete Ansicht, dass formelle Kreditgeber kleinere landwirtschaftliche Betriebe tendenziell benachteiligen. Die Ergebnisse legen außerdem nahe, dass Verfahren zur Aufdeckung und Signalisierung der Nachfragerqualitäten die Kreditaufnahme wahrscheinlicher machen und die Kreditkosten senken. Die Analyse verdeutlicht, dass die Wahl der Bank einen signifikanten Effekt auf die Höhe der Kreditkosten hat. Bei sonst gleichen Vertragseigenschaften bieten die traditionellen landwirtschaftlichen Kreditgeber (die Genossenschaftsbanken und die von der Regierung kontrollierte Bank für Nahrungsmittelwirtschaft) um 1,1 bzw. 1,3 Prozentpunkte höhere effektive Zinssätze, verglichen mit dem günstigsten Angebot. Dies ist für eine künftige Restrukturierung des ländlichen Bankensektors in Polen von Bedeutung. Außerdem gibt es deutliche Hinweise darauf, dass die Wirkung der staatlichen Zinssubventionierung durch gesteigerte Transaktionskosten und adverse Selektion von Kreditnehmern stark verringert wird. Allerdings führt sie im Vergleich zu nichtsubventionierten Krediten immer noch zu einer Netto-Verringerung des effektiven Zinssatzes um durchschnittlich 1,4 Prozentpunkte. Es stellt sich daher die Frage, ob die Vergabeprozeduren des staatlichen Kreditprogramms hinreichend effizient sind und ob die Kredite effektiv plaziert werden

The Impacts of the Climate Change Levy on business: Evidence from Microdata

We estimate the impacts of the Climate Change Levy (CCL) on manufacturing plants using panel data from the UK production census. Our identification strategy builds on the comparison of outcomes between plants subject to the CCL and plants that were granted an 80% discount on the levy after joining a Climate Change Agreement (CCA). Exploiting exogenous variation in eligibility for CCA participation, we find that the CCL had a strong negative impact on energy intensity and electricity use. We cannot reject the hypothesis that the tax had no detrimental effects on economic performance and on plant exit.Climate policy, carbon tax, United Kingdom, manufacturing, impact assessment

Unsupervised Classification for Tiling Arrays: ChIP-chip and Transcriptome

Tiling arrays make possible a large scale exploration of the genome thanks to probes which cover the whole genome with very high density until 2 000 000 probes. Biological questions usually addressed are either the expression difference between two conditions or the detection of transcribed regions. In this work we propose to consider simultaneously both questions as an unsupervised classification problem by modeling the joint distribution of the two conditions. In contrast to previous methods, we account for all available information on the probes as well as biological knowledge like annotation and spatial dependence between probes. Since probes are not biologically relevant units we propose a classification rule for non-connected regions covered by several probes. Applications to transcriptomic and ChIP-chip data of Arabidopsis thaliana obtained with a NimbleGen tiling array highlight the importance of a precise modeling and the region classification