The Impact of Banking Interest Rates in Agriculture
Abstract
National Bank of Romania establishes the monetary policy interest rate. The characteristicsof the Romanian’s financial system have impact on the degree of correlation between interest rates inthe banking system. This research uses the method of analyses of the impact of monetary policychanges in interest rate on key macroeconomic variables and on agriculture credit. The dimensionsand the evolution of agricultural credit show the restricted access of farms to the financial bankresources during the period 2007-2011. It is also evaluated the vulnerability of the agricultural system.The access of agricultural farms to the bank credit offer is determined through a series of factors.Romanian agriculture faced special problems regarding access to bank credits, because in competitionwith other sectors in the economic activity (industry, commerce, transportation etc.) agriculture wasthought to be unattractive and with a high risk for the banking sector. The evolution of the interest ratehas also a great impact on the evolution of agricultural products prices. Annual National Bank interestrates and inflation rates created difficulties in realizing the main objective - the prices stability. On thethird millennium, the development of a performing agriculture depends largely on the flexibility andefficiency of the crediting system practiced by the commercial banks and the access of agriculturalfarms to bank credits.
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