Financial market policy and agricultural credit in New Zealand 1970 to 1985
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Authors
Date
1988
Type
Thesis
Abstract
The objective of the research reported in this thesis was to investigate indirect and direct effects on supply of agricultural credit in New Zealand of government policies
with respect to the financial market.
First, it was hypothesised that financial market interventions might indirectly influence supply of credit to
the agricultural sector by causing changes in the structure
of the financial market. By way of background, the
structure of the New Zealand financial market is described
in some detail in this thesis and a survey of rationale for
government intervention is presented. Effects of
interventions on market structure are reported. They were
studied using a theoretical model of a monopolistically
competitive financial firm and empirical analysis was
carried out using both qualitative and statistical
techniques. The general conclusion was that, during the
time period studied (1970 to 1985), interventions had very
few systematic effects on market structure as measured by
institutional shares of deposits and advances outstanding.
It was concluded therefore that interventions were unlikely
to have had indirect effects on the supply of agricultural
credit.
The second channel of influence of government
interventions that was hypothesised was a direct one.
Research on this aspect was restricted to a case study of
trading bank lending. A single market model incorporating
disequilibrium was used for this purpose. Analysis of the
model indicated that interventions had direct effects on the
supply of agricultural credit. Owing to data problems
however, it was not possible to elicit the exact nature of
those effects.
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