Tóth, József

Corvinus Research Archive

Credit level influencing factors at Hungarian farms József Tóth (jozsef.toth@uni-corvinus.hu)  Kristóf Tóth EU-FADN: 50 years informing the CAP and much more Brussels, Charlemagne, Sicco Mansholt room 11 June 2015 Background Financial situation of farmers and creditability is a standard and important topic in agricultural economics.  According to the literature collateral (tangible assets), farm size and subsidies have significant effects on farm loans.  Growing supports can substitute bank loans with more cheaper and – particularly after the financial crisis – more and easier available subsidies.  Objective  To estimate the impact of different factors on creditability of agricultural farms.  Data & Methodology  The data were drawn from the Hungarian Farm Accountancy Data Network. We used unbalanced panel for the period 2001-2010 with 19146 observations in total. We have estimated fixed effect panel data models which helps in controlling unobserved heterogeneity and the effect of omitted variables.  Department of Agricultural Economics and Rural Development Hypotheses H1: Subsidies and profit reduce credit demand  H2: Economic size and collateral increase creditability  H3: There are other factors which significantly influence creditability  Results 1: Short-term loan Results 2: Long-term loan  Conclusions  Subsidies like profit decrease the demand for short- and long-term loans together with total liabilities. Size of farms (expressed in ESU, total output and tangible assets) increases the creditability, but ESU decreases the claim for long-term loans. Inventory  growth increases the demand for short-term loans. Hungarian farms are squeezed both by buyers and suppliers on short run and with respect to total liabilities. Suppliers partly compensate buyers on the long run.  Results 3: Total liabilities We acknowledge the financial support of the  Hungarian Scientific Research Fund (OTKA), K 84327 „Integration of small farms into modern food chain” Total subsidy -0,09*** Profit before taxation -0,09*** Economic Size Unit (ESU) 28,84*** Total output 0,07*** Tangible assets 0,14*** Inventory 0,45*** Buyers 0,31*** Suppliers 0,17*** Constant -22646*** R2 (within) 0,45 Total subsidy -0,02* Profit before taxation -0,17*** Economic Size Unit (ESU) -11,11*** Total output 0,07*** Tangible assets 0,19*** Inventory - Buyers 0,09*** Suppliers -0,07*** Constant -10564*** R2 (within) 0,40 Total subsidy -0,24*** Profit before taxation -0,39*** Economic Size Unit (ESU) 13,69* Total output 0,14*** Tangible assets 0,59*** Inventory 0,48*** Buyers 0,73*** Suppliers 0,79*** Constant -29962*** R2 (within) 0,73 Notes: * p<0,1  ** p<0,05  *** p<0,01 Source: own calculation 

Credit level influencing factors at Hungarian farms

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