Free rural credit offer: VAR model

Abstract

About 80% of the financial resources borrowed by agricultural producers are regulated. However, the Brazilian government is interested in the increase of the participation of the free market on the offering of credit to the agricultural sector. In this context, the main objective of this work was to understand which variables exert a direct influence on the offer of rural credit at free interest rates in Brazil. To do so, a VAR model was estimated with the following variables: free rural credit; IBC-BR; IGP-DI; default; free interest rate; regulated interest rate. The results showed that the regulated interest rates have a negative impact on the supply of free rural credit. Default and inflation corroborate the results found in the literature, while the economic activity had no impact.