INDIVIDUAL FARMERS’ BANK LOANS AND DEPOSITS IN POLAND UNDER ECONOMIC UNCERTAINTY DURING THE COVID-19 PANDEMIC

Abstract

Aim: The paper aimed to evaluate changes in farmers’ bank loans and deposit value under economic uncertainty, mainly caused by the COVID-19 pandemic. Methodology: The statistical data from Narodowy Bank Polski for the span of January 2018 – September 2022 was used and the dynamic indexes were computed. The Global Economic Policy Uncertainty Index was also used to show if the COVID-19 pandemic increased economic uncertainty. Results: The results show that in the analyzed period, an increase in the value of farmers’ bank deposits and a drop in farmers’ bank loans were observed. An increase in the value of farmers’ bank deposits occurred when interest rates were extremely low, so it can be stated that the growth of the value of farmers’ bank deposits resulted from economic uncertainty, and not from the rising profitability of deposits. At the same time, the value of farmers’ bank loans decreased, but it is difficult to indicate if this is an effect of the tightening of banks’ loan policies or of the farmers’ aversion to risk. Conclusions: The research concerning economic entities’ loan and deposit activity is a very important subject because of the increasing role of uncertainty nowadays. What is observed is that the value of farmers’ bank loans dropped but it is difficult to state for sure if this was caused by economic uncertainty and therefore reduced capital needs of farms or by the reduction of banks’ credit activity and negative credit decisions.