ABSTRACT
This chapter analyzes agricultural credit and credit policies. It explains how these have influenced the development of Ecuador’s agricultural sector. Credit is important in agricultural development because all investments in agriculture require an initial commitment of funds in return for expected future profits. As a result, there will be a lapse between the time funds are committed to the investment and when the investment generates the income necessary to repay the costs of the investment. Ecuador’s agricultural credit policy consists of the private and public terms and conditions under which savers save and borrowers borrow and how these terms are enforced in the agricultural sector. The main source of loanable funds for banks and other financial institutions serving the agricultural sector is the Central Bank. The Central Bank of Ecuador obtains funds from the Government of Ecuador’s budget allocations, foreign loans, contributions of Ecuadorian private banks and other financial organizations, and sales of bonds in the national capital markets.
