Efficiency Analysis of Field Crop Farms in Central and Eastern Europe

Lakatos, Vilmos – Makai, Szabolcs

Keywords: financial regulation, external financing of agriculture, epidemic, time series analysis, payment moratorium, G18, Q14, Q17

The European union’s institutional framework is paying particular attention to the prevention and management of non-performing loans (NPLs) in the interests of financial stability. As a result of a deliberate and planned strategy involving all stakeholders, the non-performing loan ratio has now fallen dramatically in the European union and has reached a historic low in Hungary. The aim of this study is to examine the impact of COVID-19 on NPLs in the EU, with a particular focus on the domestic agricultural sector. The authors hypothesize that the trend in the NPL rate has not been significantly affected by the COVID-19 epidemic, neither in the EU in general nor in the domestic agricultural sector. The research uses longitudinal (trend analysis) and cross-sectional study methods to confirm the validity of the hypothesis. The results also show that COVID-19 affected different sectors differently, but that the agricultural sector - after temporary disruptions - responded resiliently and with good results in both the EU and Hungary, which, alongside central interventions, played a role in keeping the sector’s NPL levels low. Central measures at EU level and in Hungary have helped to maintain financial stability. The successful adaptation of the domestic agricultural sector to the situation caused by COVID-19 is also demonstrated by its leading role in the return to market conditions from the payment moratorium imposed under COVID-19, which coincides with the recommendations of the Eu and domestic banking supervisors. The results of the study suggest further progress in external bank financing for the development of domestic agriculture. However, the epidemic is not yet over and further monitoring and analysis of the impact of COVID-19 remains reasonable.

Full article