Analysis index for agricultural credit market in Egypt

Abstract

Agricultural Credit is the most important factor for the development of the agricultural production and improving rural communities. In capitalist societies, agricultural credit focuses more attention an loan security and efficiency. Moreover, credits in these countries are often available only for large farmers. Small farmers suffer from lack of capital available to carry out the production process, in order to achieve the economic efficiency, especially in light of the application of economic reform policies. Many farmers tend to borrow from the Bank for Development and Agricultural Credit with unfair lending conditions, which do not suit with their abilities and capabilities and many of them fail to repay loans, and this problem becomes a common problem for most small farmers in the new land. The study analysis the structure of agricultural credit in the principle bank of Development and Agricultural Credit (PBDAC), as it is an development aim to credit as a major source of agricultural credit in Egypt, the most important agricultural economic factors affecting both the demand and supply of credit. A standard model has been designed on the basis of real-time changes in demand (agriculture loans, investment and loans) which have a direct impact on the size of the supply cash available for credit. The standard model results indicated that most important factors affecting demand for credit loans for agriculture interest rate, are total wages of agricultural workers, value of agricultural investment, the area of reclaimed land in thousands Faddans, total income of Agriculture, the total demand for credit to agriculture loans in the previous year in Egyptian pounds. The study showed that important factors affecting money supply of credit are the demand for investment credit (loans investment) in the previous year, interest rate, the total value of deposits and savings, the total funding of the Bank for Development and Agricultural Credit overdraft, the total agricultural income and the value of agricultural investment.