Agricultural Credit Cooperatives and the Restructuring of the Supply of Agricultural Credit in Portugal: Healthy Innovation of Institutional Collapse?
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Date
1987-12
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Publisher
Ohio State University. Department of Agricultural, Environmental, and Development Economics
Abstract
This paper documents the radical restructuring of the supply of agricultural credit in Portugal in the 1980s. In the previous decade commercial banks and the Ministry of Agriculture programs dominated the supply of agricultural finance. However by 1986 the national network of agricultural credit cooperatives (Caixas de Credito Agricola Mutuo) had emerged as the major supplier of agricultural credit in the country. Controversies such as portfolio concentration, a high incidence of rescheduled loans, high equity multipliers, low capital asset ratios and unstable and ambiguous rate of return on equity (net worth) have led to the creation of a second tier institution to intermediate excess liquidity in the network and act as a lender of last resort. Statutory limitations on CCAM lending activity and controversies surrounding a new national bank-type role for the second tier institution currently create uncertainty about the future of the CCAM system in Portugal.