The Institutional Support of Agricultural Loans and its Role in Czech Agriculture

Abstract

The paper deals with the analysis of the institutional support of agricultural loans and its role in Czech agriculture based on the dynamic optimal model. The dynamic optimization problem is solved by the Lagrange method. The application of the theoretical model shows that the lower is the interest rate paid by the farmer the lower is the optimal consumption and consequently the farmer is willing to employ higher part of the capital in the production. Thus, the initial capital is more effectively employed. The time series analysis shows that the SGAFFs activities significantly support the farmers investments. In spite of the problems in the setting of the SGAFFs policy, the role of the SGAFF in financing of agricultural activities can be regarded to be positive in the analyzed period.SGAFF (Supporting and Guarantee Agricultural and Forestry Fund), dynamic optimization, agricultural output, investments., Agricultural Finance,