Comparative analysis between the agricultural credit market in Brazil and in the United States

Abstract

The present study enrolled a comparative and qualitative analysis of the rural credit strategies in Brazil and in the United States of America through the lens of the theoretical frame of the New Institutional Economics combined with the contemporary literature about strategy. The results indicate a variety of hybrid contractual arrangements in both countries due mainly to the agents’ interdependency and environment uncertainty related to the rural credit transaction. The study also highlighted the economic agents ́perception of the market functioning. In Brazil there is a sense of judicial failure due to the weak creditor right’s enforcement. In this situation the Brazilian agents adopt strategies to minimize the risks ex ante, which includes safeguards agreements and severe screening processes. In the USA, thanks to a well developed judicial system associated with an informational system that reduces the asymmetry, the creditors adopt aggressive marketing strategies maintaining a competitive environment in the rural credit market.