IMPACT OF BANK LENDING ON DEVELOPMENT OF THE AGRICULTURAL SECTOR IN BULGARIA
IMPACT OF BANK LENDING ON DEVELOPMENT OF THE AGRICULTURAL SECTOR IN BULGARIA

Author(s): Damyan Kirechev
Subject(s): Economy, Agriculture
Published by: Udruženje ekonomista i menadžera Balkana
Keywords: Financing of agriculture;crediting;agricultural credits;access to credit;subsidizing agriculture;
Summary/Abstract: The aim of the article is to analyze the role of bank lending for the development of the agrarian sector and to assess the impact of subsidies on bank lending, on the example of Bulgaria. The survey period is 2007-2018 – after the country joined the European Union. The correlation between the bank credit and the production generated in the sector is analyzed. Data from the Bulgarian National Bank and the Ministry of Agriculture and Food of Bulgaria were used. There is a correlation between the bank credit for agriculture and the production produced in the sector. The importance of credit for agrarian development is increasing. Improvements in credit conditions for agricultural holdings are observed. Bank loans are analyzed by type and term. The relationship between bank lending and agricultural subsidies for various scale producers has been studied. Small farms are more likely to use subsidies to secure short-term loans, and large farms prefer long-term loans. Subsidies typically have a push-out effect on short-term loans for large farms and on long-term loans for small farms. There is a positive causal effect of subsidies on bank loans for the agrarian sector. Recommendations are proposed to improve access to credit for farmers as a prerequisite for sector growth.

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