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© 1998 Oxford University Press and the Foundation for the European Review of Agricultural Economics

research-article

Agricultural transformation and implications for designing rural financial policies in Romania

FRANZ HEIDHUES*,1, JUNIOR R. DAVIS*,2 and GERTRUD SCHRIEDER*,3

1Department of Agricultural Economics and Social Sciences, University of Hohenheim D-70593 Stuttgart, Germany
2CERT, Heriot-Watt University, UK
3University of Hohenheim, Germany

Received March 1, 1998;

Summary

The current depth and future development of rural finance in Romania are discussed in the context of Romania's macroeconomic and agricultural transformation. The rural finance system in CEE countries is part of the overall agricultural support system and still serves to transfer implicit subsidies to agriculture. The paper argues that building an efficient rural finance system to address the financial demands of the private agricultural sector requires a multi-level approach. Innovations are needed: at the finance system level, in particular to create an effective regulatory and supervisory framework and to free the Central Bank from government interference; at the level of financial organisations, to give highest priority to efficiency and credit worthiness when approving credit; and at the level of financial services to adapt administration procedures and product design to the demands of the rural clientele.

Keywords: rural finance, transition, Romania


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