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farming and agribusinesses. Smaller farmers also often lack the collateral, titles to their land/property, and financial recordkeeping and cash flow planning needed to make credit assessment and monitoring easier for banks. In addition, farmers needing to make structural changes in agriculture would typically require l... | agricultural-finance-developing-countries.pdf | Agricultural management |
literacy, and connections of larger farmers and businesses. The limited availability of agricultural finance also rests on the failed policies pursued in the past. Between the 1960s and the 1980s, developing country governments and development institutions traditionally used a top-down approach to agricultural finance,... | agricultural-finance-developing-countries.pdf | Agricultural management |
Services for the Poorest project. These programs, as well as other initiatives, also provide technical assistance to local financial institutions. This was a primary focus, for example, in the Strengthening India’s Rural Credit Cooperatives program and in the Ghana Rural Financial Services Project, in which training an... | agricultural-finance-developing-countries.pdf | Agricultural management |
MFIs have developed a number of innovative ways to link institutional finance to agriculture. These include tailoring lending strategies to the agricultural supply chain in order to address limited collateral among smaller farmers. For example, farmers could borrow against output stored in licensed warehouses, or produ... | agricultural-finance-developing-countries.pdf | Agricultural management |
mean that farmers can use that system to secure loans for agricultural operation. 1.8 Why the Challenge Is So Difficult Since the early 1990s, financial institutions have leaned increasingly toward creating market-based instruments for borrowers. Accordingly, there have been a number of efforts to develop market–based... | agricultural-finance-developing-countries.pdf | Agricultural management |
in developing countries find it easier to directly subsidize products through state-owned agricultural development banks rather than support innovations by commercial banks. Such an approach may be worth supporting in the short term because subsidized funds may be targeted to reach out to farmers, but in the long run, ... | agricultural-finance-developing-countries.pdf | Agricultural management |
the other hand, farmers, once they have experienced waived loans because of crop failure and consequential government loan forgiveness policies, are reluctant to pay off their loans even if their crops were not affected. 12 Continued innovation is perhaps very essential for a market that is indeed subject to uncertaint... | agricultural-finance-developing-countries.pdf | Agricultural management |
banks are likely to borrow for agricultural/business purposes, irrespective of farmers’ income. But with MFIs, where borrowers get the services at their doorsteps by being involved directly with group activities, and with MFIs’ better patron–client relationships, farmers are willing to invest more in agriculture by bor... | agricultural-finance-developing-countries.pdf | Agricultural management |
agricultural households’ improved access to and use of alternative types of institutional financial services. Chapter 2 of Part I provides a cross-country analysis of Findex data that includes an overview of the state of agricultural finance in developing countries, including main policy actors, how different sources o... | agricultural-finance-developing-countries.pdf | Agricultural management |
of financial institutions, the respective shares are only 8% from institutional sources and an overwhelming 54% from informal sources. The cross-country analysis shows that financial account ownership is strongly associated with agricultural productivity. The demand for financial services is high across farmers of vary... | agricultural-finance-developing-countries.pdf | Agricultural management |
country engaged in agricultural finance earlier than many others, Thailand provides a unique case study of policymaking concerning financing agriculture. The country’s cross-sectional, multi-year surveys, collected through socioeconomic surveys, also provide rich data sets with which to analyze issues such as access, c... | agricultural-finance-developing-countries.pdf | Agricultural management |
income. But they do not mobilize savings like BAAC, Agricultural Finance in Developing Countries: Challenges and Opportunities 26 and they hence depend on the government for funding.14 Financial institutions do need to address crop insurance—farmers are not insuring crops, partly because the insurance market is not as ... | agricultural-finance-developing-countries.pdf | Agricultural management |
the effects on profit from self-employment and on farm efficiency. The Viet Nam study shows that larger farmers are well served by Agribank, the large state-owned agricultural lender. This lender appears to be profitable but is slowly reducing its lending to agriculture. In contrast, VBSP is found to be an effective le... | agricultural-finance-developing-countries.pdf | Agricultural management |
of farmers had a financial account in Bangladesh compared to 57.3% in South Asia and 57.1% in the developing world. The government has been steadily increasing the share of public funds for agricultural lending to help ensure food security in the country, raising the agricultural credit disbursement target by 22.7% to ... | agricultural-finance-developing-countries.pdf | Agricultural management |
not self-sustainable. In contrast, MFIs are more cost‑efficient than the state-run agricultural development banks. The government’s direct role in agricultural finance in Bangladesh needs to be evaluated based on the experience of MFIs active in rural and agricultural finance. Chapter 6 discusses the agricultural finan... | agricultural-finance-developing-countries.pdf | Agricultural management |
The study finds that small and marginal farmers remain dependent on informal credit despite an increase in their access to institutional finance. Part of the problem lies in supply-side issues. The growth in bank-provided agricultural credit has typically been focused on larger loans, which tend to reach large landhold... | agricultural-finance-developing-countries.pdf | Agricultural management |
has a very poor branch network of non-digital 29 How Agricultural Finance Matters for Development: An Overview financial institutions, but it has a huge mobile financial network due to the unprecedented growth of mobile phone technology. As per the Global Findex data of 2021, the financial inclusion rate among farmers ... | agricultural-finance-developing-countries.pdf | Agricultural management |
in the region. Ethiopia represents the case of a branch‑based financial network while Uganda represents the higher penetration of mobile financial services. For example, in 2017, some 58% of farmers had a mobile account in Uganda compared to only 0.2% in Ethiopia. But in both countries, farmers are found to rely on ins... | agricultural-finance-developing-countries.pdf | Agricultural management |
extension of agricultural finance to meet the unmet demand for financial services in this region. Chapter 8 presents a regional perspective of agricultural finance from LAC, a more developed region in comparison to SSA. LAC is home to a population of 650 million with agriculture accounting for only 8% of GDP and 14% of... | agricultural-finance-developing-countries.pdf | Agricultural management |
would warrant, most of the LAC countries are not out of line with that of other developing regions. Many governments in LAC continue to subsidize agriculture to promote exportable food items such as high-value fruits, maize, and poultry. In most cases, governments subsidize agriculture in part through low-interest loan... | agricultural-finance-developing-countries.pdf | Agricultural management |
V presents a discussion of emerging opportunities related to agricultural finance and the ways to further development in this important area. More specifically, Chapter 9 presents a discussion on digital finance to support agricultural finance meant to reach smallholders in agriculture, who have limited access to insti... | agricultural-finance-developing-countries.pdf | Agricultural management |
can come from commercial banks, which are capable (unlike cooperatives and MFIs) of mobilizing savings at a large scale. Commercial banks, however, are found to be reluctant to lend to smallholders due to the high transaction cost of lending and mobilizing in small amounts. Meanwhile, MFIs and cooperatives, which are f... | agricultural-finance-developing-countries.pdf | Agricultural management |
a financial system, including MFS, smallholders in agriculture have limited access to institutional finance, such as credit, for a variety of reasons including lack of physical access to financial institutions; they still depend more on selfand informal finance rather than on institutional finance. While MFS have poten... | agricultural-finance-developing-countries.pdf | Agricultural management |
Evidence from Agriculture in Mali. Working paper, Northwestern University. Binswanger, H., and S. R. Khandker. 1995. The Impact of Formal Finance on the Rural Economy of India. Journal of Development Studies 32: 234–262. Biscaye, P., C. Clark, K. Harris, L. Anderson, and M. Gugerty. 2015. Review of Rural and Agricultur... | agricultural-finance-developing-countries.pdf | Agricultural management |
Paper No. 7255. Washington, DC: World Bank. Delavallade, C., F. Dizon Jr., R. Vargas Hill, and J. P. Petraud. 2015. Managing Risk with Insurance and Savings: Experimental Evidence for Male and Female Farm Managers in West Africa. IFPRI Discussion Paper 01426. van Empel, G. 2010. Rural Banking in Africa: The Rabobank Ap... | agricultural-finance-developing-countries.pdf | Agricultural management |
Hess. 2016. Insurance and Emerging Trends in Agricultural Insurance. Bonn: GTZ. Hill, R. V., and M. Torero, eds. 2009. Innovations in Insuring the Poor. 2020 Vision Focus 17, International Food Policy Research Institute (IFPRI). International Finance Corporation (IFC). 2013. IFC and Agri-Finance: Creating Opportunity W... | agricultural-finance-developing-countries.pdf | Agricultural management |
Brief No. 3, International Institute for Sustainable Development (IISD). Agricultural Finance in Developing Countries: Challenges and Opportunities 36 Seibel, H. 2000. Agricultural Development Banks Close Them or Reform Them? Finance and Development 37(2). Sial, M. H., and M. R. Carter. 1996. Financial Market Efficienc... | agricultural-finance-developing-countries.pdf | Agricultural management |
collateral and lower production efficiency. In response, policymakers have increasingly focused on approaches to raise agricultural productivity in order to ensure sustainable economic growth—including investing in new technologies, seeds/crops, and processes to help farmers manage weather shocks, as well as investing ... | agricultural-finance-developing-countries.pdf | Agricultural management |
agriculture B. Average Cereal Yield A. Agricultural Value Added per Worker 0 5,000 0 20 40 60 10,000 15,000 20,000 Agricultural value added per worker (constant 2015 $) Share of country’s GDP in agriculture EAP ECA LAC MENA SAR SSA EAP ECA LAC MENA SAR SSA Lowess curve EAP = East Asia and the Pacific, ECA = Europe and ... | agricultural-finance-developing-countries.pdf | Agricultural management |
sectors (see McCullough [2017] for a discussion of SSA and ILO [2014] for a global analysis). 2.2 Potential Role of Financial Services in Raising Agricultural Productivity Financial services, including agricultural financing and assistance for farmers to engage in other financial transactions, are an important—althoug... | agricultural-finance-developing-countries.pdf | Agricultural management |
farmers and farmers who are less informed or trained about risk sharing (see Giné, Townsend, and Vickery 2008 for a study from India and Dercon et al. 2014 for a study from Ethiopia). Despite their potential benefits, financial services for agriculture still face several limitations in developing countries: • On the su... | agricultural-finance-developing-countries.pdf | Agricultural management |
schedules are also not adapted to the seasonality of agricultural production. Farmers also often lack the collateral, secure ownership of land/ property, and financial recordkeeping and cash flow planning needed to make credit assessment and monitoring easier for banks. Farmers who need to make structural changes on th... | agricultural-finance-developing-countries.pdf | Agricultural management |
goals to unexpected emergencies. In particular, the literature lacks analysis of cross-country evidence regarding financial inclusion. In this chapter, we use the Global Financial Inclusion (Global Findex) Survey, a large, individual-level, cross-country dataset with detailed measures of financial inclusion, to better ... | agricultural-finance-developing-countries.pdf | Agricultural management |
and Opportunities 42 characteristics, and financial services. Cross-country analyses will not be able to identify the exact channels driving financial inclusion and investments in agriculture. However, using aggregation/large sample sizes when examining comparable data across countries can help researchers and policyma... | agricultural-finance-developing-countries.pdf | Agricultural management |
agriculture, thus identifying where better targeting is likely needed. 2.3 Main Questions and Findings (i) What is the correlation between financial inclusion and agricultural productivity, and which aspects of financial inclusion matter more? Ƀ Financial account ownership, particularly the ability to conduct cashless... | agricultural-finance-developing-countries.pdf | Agricultural management |
far away). In particular, in regression analyses controlling for socioeconomic and geographic variables, the role of distance emerges as a key constraint among those in market‑based agriculture, particularly for those at the higher end of the income distribution. Ƀ In the regression analysis, we find that while both ed... | agricultural-finance-developing-countries.pdf | Agricultural management |
reasons, with multiple responses permitted).7 Additional individual-level characteristics include age, education level, and income quintile. Understanding the links between agricultural productivity and financial inclusion is complex and requires household panel survey data to clarify how access to financial services c... | agricultural-finance-developing-countries.pdf | Agricultural management |
added per worker is a measure of agricultural productivity. Value added in agriculture measures the output of the agricultural sector (ISIC divisions 1–5) less the value of intermediate inputs. Data are in constant 2010 United States dollars. Results were similar when looking at the change in financial account ownershi... | agricultural-finance-developing-countries.pdf | Agricultural management |
the past year (Demirguc-Kunt and Klapper 2012). Figure 2.2: Country-Level Locally Weighted Regressions: Financial Account Ownership Against Agricultural Productivity, 2011–2021 0.2 0.4 0.6 0.8 Share of adults 15+ with a financial account 15,000 20,000 0 5,000 10,000 2011 2014 2017 2021 Agricultural value added per wor... | agricultural-finance-developing-countries.pdf | Agricultural management |
in our country-level comparisons of changes in financial inclusion relative to aggregate country-level measures of dependence on agriculture (share of GDP in agriculture, for example). For the rest of the chapter, when we refer to individuals in agriculture, we mean those specifically engaged in market-based agricultur... | agricultural-finance-developing-countries.pdf | Agricultural management |
Latin America and the Caribbean (LAC) Middle East and North Africa (MENA) South Asia (SAR) SubSaharan Africa (SSA) Female 0.45 0.44 0.34 0.24 0.42 0.45 [0.50] [0.50] [0.47] [0.43] [0.49] [0.50] Education Primary or lower 0.68 0.23 0.46 0.72 0.69 0.74 [0.47] [0.42] [0.50] [0.45] [0.46] [0.44] Secondary 0.27 0.66 0.45 0.... | agricultural-finance-developing-countries.pdf | Agricultural management |
full sample across countries, for example, only 25% of those in market-based agriculture said it was “very possible” for them to come up with emergency funds, compared to 31% of individuals not engaged in agriculture.10 Table 2.2 presents the different sources of funding that individuals in market-based agriculture who... | agricultural-finance-developing-countries.pdf | Agricultural management |
Global Findex Data Table 2.2: Continued Middle East and North Africa South Asia Sub-Saharan Africa No fin acct Fin acct No fin acct Fin acct No fin acct Fin acct Highest income quintile Savings 0.25 0.44 0.24** 0.34** 0.17*** 0.29*** Relatives/friends 0.48*** 0.09*** 0.50*** 0.30*** 0.21*** 0.15*** Money from working... | agricultural-finance-developing-countries.pdf | Agricultural management |
individuals with a financial account were significantly more likely to rely on savings and less likely to rely on support from family and friends. While this was less likely for individuals in the lowest income quintile than for individuals in the highest income quintile, it was still much greater than for those withou... | agricultural-finance-developing-countries.pdf | Agricultural management |
financial inclusion for individuals in market-based agriculture—ownership of financial accounts,11 mobile money accounts,12 and saving, borrowing, and sending/receiving remittances across financial institutions and other sources. We also present summary statistics by region. Table 2.3 shows that the share of individual... | agricultural-finance-developing-countries.pdf | Agricultural management |
Europe and Central Asia Latin America and the Caribbean Middle East and North Africa South Asia SubSaharan Africa Has a financial accounta 0.43 0.47 0.41 0.32 0.51 0.24 Has mobile money account (separate from a financial account)b 0.05 0.14 0.14 0.01 0.08 0.30 Used a mobile phone for any financial transactions (include... | agricultural-finance-developing-countries.pdf | Agricultural management |
a mobile phone to pay bills or to send or receive money in the last 12 months. Agricultural Finance in Developing Countries: Challenges and Opportunities 52 Interestingly, Table 2.3 also shows that a significant share of individuals in market-based agriculture did save and borrow money; we also found that savings and b... | agricultural-finance-developing-countries.pdf | Agricultural management |
Farm/business purposes 0.25 0.21 0.32 0.25 0.18 0.32 Old age 0.27 0.19 0.20 0.15 0.19 0.14 Borrowed in last 12 months for: Farm/business purposes 0.20 0.14 0.20 0.11 0.15 0.20 Medical expenses 0.13 0.14 0.18 0.12 0.18 0.24 Notes: Statistics reflect shares of individuals reporting. High-income countries are excluded fro... | agricultural-finance-developing-countries.pdf | Agricultural management |
in terms of savings, borrowing, and transfers. Some potential channels through which this understanding can be increased at the country level include a better examination of agriculturalists’ types of earnings, financial literacy, and motivation, as well as their access to formal institutions and markets. Figure 2.3: ... | agricultural-finance-developing-countries.pdf | Agricultural management |
In all countries, however, financial account ownership matters substantially for engagement in other types of financial services. Although we do not discuss weather-indexed insurance in detail in this chapter, these products form another financial instrument being explored in agricultural areas. The post-2011 rounds of... | agricultural-finance-developing-countries.pdf | Agricultural management |
Data Figure 2.4: Percent of Individuals in Market-Based Agriculture Who Engage in Electronic/Mobile Banking, Saving, and Borrowing, 2017 Global Findex 2.4a: Without a Financial Account 0 5 10 15 20 25 30 35 40 45 50 Informal savings Borrowing from financial institution Informal borrowing Credit/debit card Mobile banki... | agricultural-finance-developing-countries.pdf | Agricultural management |
7 No need 36 44 34 31 29 16 Number of individuals without final account 1,816 1,456 592 317 719 6,384 Notes: 1. Statistics reflect shares of individuals reporting. 2. Financial account = accounts at a bank or another type of financial institution, such as a credit union, cooperative, or microfinance institution. Adul... | agricultural-finance-developing-countries.pdf | Agricultural management |
regarding financial account ownership. Using probit regressions on the 2017 data, Table 2.6 presents correlations of socioeconomic and demographic variables from the Findex with different dimensions of financial activity, as discussed in Section 2.3. These dimensions include financial account ownership, credit/debit ca... | agricultural-finance-developing-countries.pdf | Agricultural management |
of agriculture with education, income, and region, we find that the strongest associations are in the latter—with greater mobile banking activity among agriculturalists in LAC and ECA, as well as greater remittance activity and savings with financial institutions within LAC and SAR, as well as greater borrowing from in... | agricultural-finance-developing-countries.pdf | Agricultural management |
−0.146 −0.246 0.099 −0.422*** LAC −0.430* −0.403 −0.117 −0.192* −0.298** MENA −0.441* −0.511* −0.286 −0.006 −0.644*** SAR 0.058 −0.624* −0.134 −0.068 −0.628*** SSA −0.517** −0.657** 0.873*** −0.016 −0.067 ECA*agr 0.021 0.219* 0.503** 0.098 0.026 LAC*agr 0.261* 0.257* 0.438*** 0.119 0.310*** MENA*agr 0.206 0.293* −0.626... | agricultural-finance-developing-countries.pdf | Agricultural management |
−0.274 −0.483*** −0.139 −0.176 −0.085 MENA −1.335*** −0.424 −0.526*** −0.242 −0.364* −0.176 SAR −0.384 −0.576** −0.222 0.150 −0.339* 0.232 SSA 0.829*** −0.142 −0.333** 0.501*** −0.428*** 0.437** ECA*agr 0.305 0.111 0.159 0.251** −0.160 0.319*** LAC*agr 0.496*** −0.036 0.243** 0.171 0.015 0.095 MENA*agr 0.519** 0.250** ... | agricultural-finance-developing-countries.pdf | Agricultural management |
−0.151*** Second 20% 0.051** −0.005 0.015 0.047** −0.047** Fourth 20% −0.074*** −0.106*** −0.023 −0.063*** 0.038 Richest 20% −0.199*** −0.162*** −0.026 −0.087*** 0.159*** Interactions with working in market-based agriculture (agr) agr.*primary education 0.012 −0.036 0.038 −0.064 0.072 agr.*tertiary education −0.122 0.3... | agricultural-finance-developing-countries.pdf | Agricultural management |
−0.122 agr.*poorest income quintile 0.147*** 0.032 −0.022 −0.091 agr.*second 20% income quintile 0.130*** 0.060 0.079* −0.068 agr.*fourth 20% income quintile 0.020 0.050 0.055 0.004 agr.*highest 20% income quintile 0.035 0.173*** −0.018 −0.014 Region dummies ECA 0.496*** 0.002 0.244** −0.364*** LAC 0.638*** 0.142 −0.15... | agricultural-finance-developing-countries.pdf | Agricultural management |
for example, as well as a similar probability of reporting that they did not actually need an account (looking at the income quintile estimates, this was more likely to be reported among poorer respondents as well). The overall effect of being in market-based agriculture was not significant for other reported constrain... | agricultural-finance-developing-countries.pdf | Agricultural management |
detailed measures of financial inclusion, we find that financial account ownership, especially the ability to conduct transactions through credit/debit cards, is strongly associated with country-level measures of agricultural productivity. Access to markets can also be eased with financial accounts that allow for cashl... | agricultural-finance-developing-countries.pdf | Agricultural management |
increasing coverage. The regression analysis also finds that while education and income are important across the entire sample of respondents, there is a significantly greater association between education and income and financial inclusion for agriculturalists, underscoring the lower access to financial institutions t... | agricultural-finance-developing-countries.pdf | Agricultural management |
Rural Economy. Decent Work in the Rural Economy Policy Guidance Notes. Jessop, R., B. Diallo, M. Duursma, A. Mallek, J. Harms, and B. van Manen. 2012. Creating Access to Agricultural Finance: Based on a Horizontal Study of Cambodia, Mali, Senegal, Tanzania, Thailand and Tunisia. À Savoir 14, July. Paris: Agence Françai... | agricultural-finance-developing-countries.pdf | Agricultural management |
in Thailand over the same period. Thailand is the world’s largest exporter of rubber and cassava, and it is a major exporter of sugar. In addition, a diverse selection of other crops contribute significantly to agricultural production, as does livestock; at the time of the 2013 agricultural census—the most recent avail... | agricultural-finance-developing-countries.pdf | Agricultural management |
1995 2000 2005 2010 2015 2020 50 10 20 30 40 0 d. Agricultural Land (% of land area) 1961 1971 1981 1991 2001 2011 2021 50 30 40 10 20 0 e. Agricultural Employment (% of total) 1990 1995 2000 2005 2010 2015 2020 70 10 20 30 40 50 60 0 f. Rural Population 1990 1995 2000 2005 2010 2015 2020 80 30 40 50 60 70 10 20 0 g. F... | agricultural-finance-developing-countries.pdf | Agricultural management |
farmers lack secure land tenure rights (World Bank 2022). Four out of every five farmers report that all or most of their income comes from agriculture, although this proportion falls below 70% for those on farms smaller than one hectare. Table 3.1: Agricultural Holdings, Income Source, and Debt Use by Farm Size Size ... | agricultural-finance-developing-countries.pdf | Agricultural management |
in the agricultural census of 2013, only 47% had taken out agricultural loans (Table 3.1). Among farmers with less than 10 rai (1.6 hectares) of land, that proportion was just 29%. Thus, we need to ask whether these figures are unreasonably low, and if so, why. In addition, poverty in Thailand remains a predominantly r... | agricultural-finance-developing-countries.pdf | Agricultural management |
that greater access to credit can have on farm incomes and production. After analyzing the financial system, we turn to the role played by government in providing financial support for agriculture. The final section of the chapter summarizes our findings and suggests some possible directions for policymaking. 69 Thaila... | agricultural-finance-developing-countries.pdf | Agricultural management |
up from 87.4% and 72.7% respectively, in 2014 (Table 3.2). Thus, the banking sector has achieved almost universal coverage. The Findex data show that 55% of farmers and 56% of nonfarmers borrowed in 2021. For farmers, the figure was essentially unchanged from 2014. Only farmers in the richest quintile had borrowing rat... | agricultural-finance-developing-countries.pdf | Agricultural management |
55.4 64.5 116 95.6 56.3 67.8 896 Total for 2014 87.4 55.5 86.0 356 72.7 47.3 77.4 644 N = number of observations. Notes: “Farmers” are defined as those who “received agricultural payments in the past 12 months” and consist of 12.5% of the (weighted) sample, which collected information from 1,017 individuals aged 15 and... | agricultural-finance-developing-countries.pdf | Agricultural management |
it remains unclear whether poor farmers are underserved by the financial system. Poor farmers’ borrowing rates, whether solely for agricultural purposes or overall, are comparable to those of better-off farmers (Table 3.2). On the other hand, borrowing rates remain low among the smallest farmers (Table 3.1). Moreover, ... | agricultural-finance-developing-countries.pdf | Agricultural management |
in 2003 (55%) quite likely shows the effect of the introduction of the Village Fund, which became operational in 2002 and injected a million baht into almost every one of Thailand’s more than 70,000 villages and urban wards in order to support rotating credit funds. The most striking feature of the debt data is the ove... | agricultural-finance-developing-countries.pdf | Agricultural management |
117,449 BAAC = Bank for Agriculture and Agricultural Cooperatives. Sources: Agricultural Census of 1993, 2003, and 2013; Intercensal Survey of 1998. National Statistics Office. In 2013, agricultural value added came to B1,470 billion ($43.2 billion). If physical inputs are equivalent to two-fifths of value added, as su... | agricultural-finance-developing-countries.pdf | Agricultural management |
78.6 75.8 72.1 Source of main loan, all uses (%) Commercial banks 6.8 7.0 5.6 5.7 9.3 BAAC 31.5 30.9 32.4 32.2 30.8 Government agencies 2.5 5.1 4.9 6.1 7.0 Other financial institutions 21.9 10.0 17.3 19.2 19.6 Co-ops/welfare organizations 8.5 7.2 7.7 7.5 4.5 Village Fund 9.5 22.9 21.0 19.3 23.6 Outsiders 19.0 16.9 11.2... | agricultural-finance-developing-countries.pdf | Agricultural management |
340,640 Other financial institutions 24,630 46,949 106,178 124,898 194,635 Co-ops/welfare organizations 80,972 90,920 219,017 281,633 433,476 Village Fund 14,266 14,949 17,361 17,073 38,015 Outsiders 26,122 34,801 38,700 46,035 74,073 Overall 40,275 92,628 70,477 82,264 111,214 Agricultural loans as % of all loans (by ... | agricultural-finance-developing-countries.pdf | Agricultural management |
source of credit; however, loans from the Village Fund are rarely enough on their own, which explains the widespread borrowing from multiple sources. Village Fund loans, at B38,000 per household on average in 2013 (bottom panel of Table 3.4), are much smaller than the average BAAC loan of B151,000 in the same year. The... | agricultural-finance-developing-countries.pdf | Agricultural management |
A cheap, simple, and secure payments system. Most agricultural households still use cash for the bulk of their transactions, although this is changing fairly quickly. Agricultural Finance in Developing Countries: Challenges and Opportunities 76 (ii) A safe vehicle for savings, both in the short and longer term. An esti... | agricultural-finance-developing-countries.pdf | Agricultural management |
... ... All rural households 100 ... ... 6,400 6,700 Notes: Poverty rate is based on official poverty line. Incomes are in United States dollars in 2011 constant prices, computed using the Bank of Thailand official exchange rate. Sources: Socioeconomic Surveys of 2011 and 2019, as reported by World Bank (2022). 77 Thai... | agricultural-finance-developing-countries.pdf | Agricultural management |
and Chawanote (2022), based on Farmer Household Financial Behavior Survey. Agricultural Finance in Developing Countries: Challenges and Opportunities 78 Similar, if sometimes more marked, profiles may be seen in the country’s other regions. In some months (April, May), revenues do not cover expenses, while in others (N... | agricultural-finance-developing-countries.pdf | Agricultural management |
of loans is BAAC, the specialized financial institution that lends to 65% of farm households. Other important sources of (smaller) loans are the Village Fund (65% of households), informal sources (31%), hire purchase agreements (28%), and savings cooperatives (28%). A majority of borrowers have loans from multiple sour... | agricultural-finance-developing-countries.pdf | Agricultural management |
Informal Collateral Dynamic incentives Debt collector Joint liability Commitment devices Social monitoring Interlinkage Figure 3.3: Perceived Cost of Default for Different Loan Sources and Enforcement Mechanisms, 2020 BAAC = Bank for Agriculture and Agricultural Cooperatives, NFI = nonbank financial institution, SFI ... | agricultural-finance-developing-countries.pdf | Agricultural management |
access to credit.” However, not all observers agree. Drawing on a survey of almost 2,200 households in the northeast region undertaken between May 2006 and April 2007, Menkhoff and Rungruxsirivorn (2011) find that 9.6% of households were credit-constrained, meaning that they had either applied for a loan and been rejec... | agricultural-finance-developing-countries.pdf | Agricultural management |
to borrow more are truly credit‑constrained by the financial system or whether they have simply reached the limit of what a lender would reasonably choose to lend. 81 Thailand: Mature Farm Lending with State-Owned Banks for Agriculture Over 30 years ago, Siamwalla et al. (1990) undertook a survey of lenders and borrowe... | agricultural-finance-developing-countries.pdf | Agricultural management |
13,000 53,557 32,649 Farm income (baht) 9,834 7,037 5,918 9,052 Nonfarm income (baht) 9,325 7,801 7,572 7,249 Remittances received (baht) 20,848 19,068 18,852 14,080 Interest earned (baht) 1,014 1,056 2,142 941 Land owned (rai) 19.6 12.8 14.9 13.7 Observations 9,471 3,413 1,653 783 % of total 63.0 22.0 10.1 4.8 Source:... | agricultural-finance-developing-countries.pdf | Agricultural management |
in lending. On the other hand, as noted earlier, recent research suggests that this model is no longer working particularly well. This change helps explain why BAAC increasingly lends to cooperatives and to individuals against collateral, and why it has begun to lend more extensively to the nonagricultural sector. Over... | agricultural-finance-developing-countries.pdf | Agricultural management |
(2001) refer to this as “risk-contingency” lending. Based on information gathered from 960 households in the center of Thailand between May 1997 and 2001, Alem and Townsend (2012) find that the consumption spending of BAAC borrowers is not sensitive to income shocks and argue that BAAC’s procedures embed an implicit in... | agricultural-finance-developing-countries.pdf | Agricultural management |
(Haughton, Khandker, and Rukumnuaykit 2014); to lend more, the Fund would either have to mobilize deposits or borrow from BAAC, which would in turn create financial liabilities that the management committees may be unwilling to assume. In the following sections, we will address the issue of whether the Village Fund has... | agricultural-finance-developing-countries.pdf | Agricultural management |
the 1980s, almost two-fifths of BAAC’s funding came from commercial bank sources (see Table 3.9); another one-third came from borrowing, much of it from overseas lenders. By about 1990, however, it had become clear that if the bank were to remain relevant, it would need to find other funding sources. It had also become... | agricultural-finance-developing-countries.pdf | Agricultural management |
to reduce its dependence on borrowing; this proved to be critical, as the sharp devaluation of the baht during the financial crisis that began in 1997 raised the servicing costs of BAAC’s foreign loans and wiped out half of its equity (Haberberger 2009). In October 1998, BAAC came under the prudential regulation of the... | agricultural-finance-developing-countries.pdf | Agricultural management |
lending interest rate would need to rise in the absence of subsidies. The main subsidies provided to BAAC constituted public funds in the form of the institution’s own reinvested profits, access to concessional loans, and a lower reserve requirement (which freed up funds for lending). Table 3.10 shows that in the absen... | agricultural-finance-developing-countries.pdf | Agricultural management |
elected village committees would lack the ability to manage the process of lending and would squander the funds. These fears have, in most cases, been unfounded; in addition, neither the proportion of farmers borrowing from the Village Fund nor the average size of loans have fallen over time (Table 3.4). Thus, the Vill... | agricultural-finance-developing-countries.pdf | Agricultural management |
and that the Fund has disproportionately helped poorer households. 87 Thailand: Mature Farm Lending with State-Owned Banks for Agriculture 3.5 The Role of Government There has been a clear evolution in the attitude of the Thai government toward the agricultural sector over the past 40 years, from one of “spend and tax”... | agricultural-finance-developing-countries.pdf | Agricultural management |
fees for water and do not come close to covering the cost of provision (Perret, Jourdain, and Saringkarn 2012). Several other government investments have also proven very helpful to farmers. These include the expansion of education, which helped increase the rural literacy rate from 78% in 1977 to 92% by 2000; electrif... | agricultural-finance-developing-countries.pdf | Agricultural management |
roads have had little discernible effect on either agricultural productivity or rural poverty. The case for continued investment in agricultural research, given its public goods nature—expensive to undertake, but cheap to disseminate—is strong. On the other hand, almost every village in Thailand now has access to elect... | agricultural-finance-developing-countries.pdf | Agricultural management |
et al. (2004). 89 Thailand: Mature Farm Lending with State-Owned Banks for Agriculture By 1990, the tax burden on agriculture had eased somewhat; the nominal rate of assistance was –6%, and the domestic price of rice had risen to 82% of the world level. The bias against agriculture had disappeared by 2000–2004, and by ... | agricultural-finance-developing-countries.pdf | Agricultural management |
can then get access to credit, typically from BAAC. This scheme thus provides a cash flow for farmers and gives them more bargaining power vis‑à‑vis traders. Table 3.12: Measures of Protection for Agriculture 1970–1974 1990–1994 2000–2004 2006–2010 Rice: Domestic price/border price 53.4 81.6 91.1 ... Nominal Rate of A... | agricultural-finance-developing-countries.pdf | Agricultural management |
billion in loans from BAAC. The political need to subsidize rice farming has not disappeared. In October 2016, the government responded to low prices for Hom Mali rice—the market price was about B4,500–B7,000 per ton at the time, as world demand for rice fell while supply expanded—by setting a pledging price of B11,525... | agricultural-finance-developing-countries.pdf | Agricultural management |
peaked at $4,067 in 2011, before falling to $1,290 in 2015. 91 Thailand: Mature Farm Lending with State-Owned Banks for Agriculture Farmers responded to the favorable prices by expanding production, from 2.2 million tons in 2000 to 3.3 million in 2010 and 4.5 million in 2015 (FAO 2017). Floods in late 2016 led to fears... | agricultural-finance-developing-countries.pdf | Agricultural management |
Debt moratoria mainly apply to BAAC loans and are now applied automatically for eligible borrowers. Using an eight-year panel (2014–2021) of a million farmer borrowers from BAAC, matched with farm and farmer characteristics from the Farmer Registration database, Ratanavararak and Chantarat find that farmers’ debt has b... | agricultural-finance-developing-countries.pdf | Agricultural management |
to support rubber or rice farmers, particularly when prices are low or when disasters triggered by natural hazards strike, represent a form of insurance. Efforts to provide formal crop insurance have, until recently, not been particularly successful. A scheme to insure cotton farmers against disasters was introduced in... | agricultural-finance-developing-countries.pdf | Agricultural management |
which already compensates farmers whose rice crop has “suffered from calamity” (Jeerahaipaisarn 2012) and pays B1,113 per rai for up to 30 rai per farmer. 93 Thailand: Mature Farm Lending with State-Owned Banks for Agriculture The Fiscal Policy Office of the Ministry of Finance has stated that it aims to reduce this pa... | agricultural-finance-developing-countries.pdf | Agricultural management |
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