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Evaluation of the Effects of Replacing the Wibor Rate by the Wiron Rate for Preferential Credits in Polish Agriculture

Author

Listed:
  • Kagan Adam

    (1 DEng, Institue of Agricultural and Food Economics National Research Institute, ; ul. Świętokrzyska 20, 00-002 Warsaw, Poland .)

  • Soliwoda Michał

    (2 DEng, University of Lodz, ; ul. Narutowicza 68, 90-136 Łódź, Poland .)

  • Gospodarowicz Marcin

    (3 DSc, Assoc. Prof. of Warsaw School of Economics, Warsaw School of Economics, ; al. Niepodległości 162, 02-554 Warsaw, Poland .)

Abstract

The aim of the article is to present an assessment of the economic effects of replacing the WIBOR rate with the WIRON rate for preferential credits in Polish agriculture. The study is an in-depth case study and uses the simulation analysis method. The introduction of the WIRON 3M rate will result in a reduction in the interest rate on preferential credits granted in the future, and the nominal scale of the discount will depend on the phase of monetary policy in the country and the level of the applicable interest rates set by the National Bank of Poland (NBP). However, in the case of credits granted according to the currently applicable mechanism (interest rate based on WIBOR 3M) or the promissory note rediscount rate, the change will most likely be neutral. The largest part of the interest rate reduction in all phases of the monetary policy cycle is obtained by borrowers (farmers) using credit lines: RR (credits for investments in agriculture and inland fishing, Z (credits for the purchase of agricultural land) and most activities financed under the PR line (credits for investments in the processing of agricultural products, fish, crustaceans and molluscs, as well as the purchase of stocks and shares). In the case of disaster loans granted to insured borrowers, the only beneficiary of the index change will be the State Treasury. Quantifying the potential savings for borrowers in the agricultural sector related to changes in reference rates is not easy due to the scarcity of the available detailed data.

Suggested Citation

  • Kagan Adam & Soliwoda Michał & Gospodarowicz Marcin, 2024. "Evaluation of the Effects of Replacing the Wibor Rate by the Wiron Rate for Preferential Credits in Polish Agriculture," Zagadnienia Ekonomiki Rolnej / Problems of Agricultural Economics, Sciendo, vol. 378(1), pages 1-29, March.
    • Handle: RePEc:vrs:zerpae:v:378:y:2024:i:1:p:1-29:n:4
    DOI: 10.30858/zer-181137
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    Keywords

    financial intervention in agriculture; preferential credits in Polish agriculture; WIBOR; WIRON; agricultural finance;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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