<abstract xmlns="http://www.w3.org/1999/xhtml">

<p>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.</p>
</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.

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

Zagadnienia Ekonomiki Rolnej

This work is licensed under the Creative Commons Attribution 4.0 International License.

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...

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

Published Online: Mar 26, 2024

Page range: 1 - 29

Received: Aug 27, 2023

Accepted: Jan 12, 2024

DOI: https://doi.org/10.30858/zer-181137

Keywords
financial intervention in agriculture, preferential credits in Polish agriculture, WIBOR, WIRON, agricultural finance

© 2024 Adam Kagan et al., published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

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

Published Online: Mar 26, 2024

Page range: 1 - 29

Received: Aug 27, 2023

Accepted: Jan 12, 2024

DOI: https://doi.org/10.30858/zer-181137

Keywordsfinancial intervention in agriculture, preferential credits in Polish agriculture, WIBOR, WIRON, agricultural finance

© 2024 Adam Kagan et al., published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

Keywords
financial intervention in agriculture, preferential credits in Polish agriculture, WIBOR, WIRON, agricultural finance