Agricultural finance and institutional reforms in transition economies

Agricultural producers' access to external financial resources has been sev erely constrained during transition, adversely affecting production, farm r estructuring and investment. Their constrained access results from a combin ation of factors stemming from costly and imperfect information in rural fi nancial markets as well as a series of transition specific problems that ha ve magnified these problems. Credit access however has recently begun to im prove for selected producers with increased profitability and the emergence of institutional innovations in the delivery of financial resources. This paper initially assesses the institutional reforms that have occurred withi n the banking sector and then discusses a series of transition specific fac tors that have magnified the problems of rural financial market incompleten ess. The potential roles of governments in solving these issues, and actual observed interventions by Central and Eastern European governments through credit subsidies, loan guarantees and training programmes, are the discuss ed. Finally, a range of financial market innovations which have solved some of these credit market problems are discussed and implications for governm ent policies drawn.