Cooperative banks and a problem of adverse selection in agricultural credit market
2012
Danilowska, A., Warsaw School of Life Sciences (Poland). Dept. of Economics and Economic Policy
The aim of the paper is to examine how the cooperative banks in Poland consider the role of the informal information and reputation of farmers in overcoming the problem of adverse selection on agricultural credit market. The information from the author’s survey was used in the analysis. The examination showed that cooperative banks as agents, which operate in local societies, use informal information about the potential borrowers in the process of allowing credits. Moreover, the results of survey confirm the role of reputation in economic relations as managers of cooperative banks admitted that they considered it. The low level of impaired loans in cooperative banks can partly stem from application of these tools aimed at solving of the adverse selection problem.
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