However, some bottlenecks continue to affect the flow of credit to agriculture. To attain a higher growth in agriculture, the major areas requiring attention in the financial sector are, inter alia, spread of insurance against crop losses and facilities for meeting the needs of the rural economy.
A recent study even comes to the conclusion that only 6% of German banks earned their cost of capital last year. What can explain these weak earnings? Well, the main culprit in Germany seems to be a business model that is relatively dependent on interest income. Such a business model poses a major challenge in the current environment of low interest rates.