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Farmers' satisfaction with agricultural credit: The case of Greece

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The existence of an appropriate institutional framework pertaining to the financial system in agriculture, which will support efficient financial mediation, reduce transaction costs, and facilitate the farmers' access to loaned capital on favorable terms, is considered to be an essential step as regards the course of competitiveness in Greek agriculture. This paper is based on an empirical study on a sample of farmers. The aim of this research study is to examine the farmers' satisfaction with current structures and services related to agricultural credit, as provided in Greece at present. On a second level, the objective of this paper is to develop a typology of farmers, based on their satisfaction structures (by a methodological scheme based on Principal Axes Factoring (PAF), Hierarchical and K-Means Cluster Analysis). The results of this typology will allow for conclusions and proposals to be deduced, regarding the potential for improving agricultural credit, with the growth of the agricultural sector as the ultimate aim. The PAF highlighted five factors-dimensions that can be used to analyze the farmers' satisfaction with agricultural credit. The first and most important factor is linked to the financial terms of credit and to transaction costs. The second focuses on the human aspect of services, facilities, and equipment. The third factor pertains to the possibility of receiving such services on a personal basis. The fourth is linked to the terms of lending, and the fifth factor exclusively defines the particular properties of agricultural credit. The typology includes three farmer clusters. Cluster S1 consists of the least satisfied farmers, whose displeasure focuses on the financial terms for banking transactions. Cluster S2 consists of farmers who portray a high degree of satisfaction with the provided services and level of service, but disagree on the financial terms for credit and the cost of transactions. Cluster S3 involves farmers who are more satisfied overall. This cluster is dominated by younger farmers with a high educational level, who achieve a high monthly income in their majority. More specifically, the farmers in all three clusters express displeasure as regards the particular characteristics of the agricultural credit provided. Finally, there is a relation of the current economic crisis with the agricultural credit system.
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Keywords: Agricultural credit; Financial Marketing; Principal Axes Factoring; funding; satisfaction

Document Type: Research Article

Affiliations: 1: Department of Farm Management,Alexander Technological Educational Institute of Thessaloniki, Thessaloniki, Greece 2: Department of Business Administration,Technological Educational Institute of Kavala, Agios Loukas, Kavala, Greece 3: Department of Forestry and Management of the Environment and Natural Resources,Democritus University of Thrace Greece, Komotini, Greece

Publication date: December 1, 2011

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