Rural Credit Research Articles

PRONAF no estado do Paraná

O trabalho objetiva analisar as atividades produtivas e empreendimentos rurais financiados pelo PRONAF no Estado do Paraná, a fim de compreender as lógicas de desenvolvimento rural e regional que o programa tem estimulado. Para cumprir este objetivo, a metodologia utilizada foi a de analisar os dados secundários da Matriz de Dados do Crédito Rural (MDCR), disponibilizados pelo Banco Central do Brasil (BCB), no período de 2013 a 2018. Os resultados e conclusões do estudo apontam para a grande expressividade do Paraná no uso dos recursos, com destaque para a modalidade de custeio, que perfaz 57% do total do volume do programa, que são aplicados em sua maioria nas culturas de grãos e commodities agrícolas. Os recursos de investimento voltam-se principalmente a aquisição de máquinas e implementos agrícolas, para uso nestas mesmas culturas modernizadas da agricultura familiar. Neste sentido, o PRONAF tem fortalecido padrões de desenvolvimento rural que visam especializar a agricultura familiar na produção agrícola, deixando de lado princípios importantes como a diversificação rural, produção de alimentos, sustentabilidade ambiental e apoio as atividades rurais não agrícolas. Palavras-chave: Agricultura familiar. PRONAF. Paraná. Desenvolvimento rural e regional.

Peran Moderasi Indeks Pembangunan Manusia Pada Hubungan Resiko Kredit Dan Resiko Likuiditas, Total Aset Dengan Kinerja Keuangan Lembaga Perkreditan Desa (LPD)

Penelitian ini didasarkan oleh peran strategik Lembaga Perkreditan Rakyat (LPD) untuk mewujudkan kemandirian masyarakat dalam memelihara Budaya dengan memberikan sumbangan sumber daya ekonomi kepada Desa Pekraman untuk mendukung pelaksanaan tugas dan tanggung jawabnya. Model konseptual yang diusulkan memasukkan elemen resiko likuiditas, resiko kredit dan potensi ekonomi wilayah untuk memprediksi kinerja keuangan LPD dikabupaten Badung dan kabupaten Bangli. Berdasarkan data yang disajikan pada laporan keuangan organisasi LPD periode 2016. Hipotesis penelitian bertujuan membuktikan apakah potensi ekonomi wilayah memoderasi hubungan resiko likuiditas dan resiko kredit dengan profitabilitas mengingat LPD adalah penyedia jasa keuangan bagi masyarakat diwilayah Adat tertentu. Hasil penelitian diharapkan memberikan informasi terkait bagaimana hubungan resiko likuiditas dan resiko kredit dengan kinerja keuangan LPD yang berlokasi diwilayah berbeda dengan Indeks Pembangunan Manusia sebagai proxi Kualitas SDM yang tidak sama untuk merumuskan strategi pemerataan potensi ekonomi, pengembangan operasional LPD dan manajemen resiko operasional LPD.

Faktor-faktor Pendukung Pencegahan Fraud pada Bank Perkreditan Rakyat

This study aims to determine whether the understanding of Risk Based Internal Audit, Whistleblowing System, anti-fraud awareness, and the application of the principles of Good Corporate Governance affect the prevention of fraud in Rural Credit Banks in Bali Province. This study uses primary data sources, using instruments in the form of questionnaires. The population used in this study were auditor internal and bord of directors from 134 Rural Credit Banks and the sample used was auditor internal from 57 Rural Credit Banks taken purposive sampling. The analytical method used is quantitative analysis that is multiple linear analysis using SPSS test equipment. t test results show that Risk Based Internal Audit, Whistleblowing System, Anti-Fraud awareness, and the application of the principles of Good Corporate Governance each have a positive effect on Fraud prevention

Microfinance Participation in Thailand

Income inequality is a major problem in Thailand. A key determinant of income inequality in Thailand is the lack of financial access to financial institutions for low-income families. Microfinance institutions (MFIs) play an important role in enabling poor households to access financial resources at a reasonable cost. The purpose of this paper is to investigate factors that affect Thai households participating in microfinance programs in Thailand. A multinomial logit model is used to investigate the factors that impact the Thai households’ access to microfinance. The study employs secondary data from the Thai Socioeconomic Survey (cross-sectional data in 2017) to identify factors affecting Thai household participation in microfinance programs. The results show that the Village Fund (VF) targets low-income rural households and encourages those with older household heads who have lower levels of education, and female household heads, to participate in their program. Larger households are more likely to access the VF. Households with higher dependency ratios are less likely to borrow from the VF. Households with well-educated, young household heads in regional areas are more likely to borrow money from Saving Groups for Production (SGPs). SGP borrower households have higher household incomes than VF borrower households. Our findings indicate that VFs and SGPs are credit sources in the rural credit market; these sources enable rural households to access credit to meet their needs. In addition, rural Thai households borrow from many sources so that they can rotate their loan repayments. Low-income households refinance their loans by borrowing from different sources.

Aktivitas Sosial, Aktivitas Budaya Dan Agama Terhadap Dana Pihak Ketiga Lembaga Perkreditan Desa (LPD) (Case Kabupaten Tabanan Bali)

This study aimed to determine the existence of social activities, cultural activities, religious activities on third party funds LPD Tabanan Regency in 2017. The study was conducted in all LPD in Tabanan Regency. The method of determining the sample used in this study is the saturated sampling method and obtained 243 LPD that meet the criteria for sampling. The type of data used is in the form of quantitative data, namely LPD financial reports registered throughout Tabanan Regency. The analytical method used is the classic assumption test, multiple regression analysis, analysis of determination, F-Test and t-test. The results of this study indicate that social activities, cultural activities and religious activities have a significant positive effect on LPD third party funds. The implications of this research for rural credit institutions, strived to continue to improve the empowerment of third party funds for social, cultural and religious activities carried out in the village.

Evaluating National Agriculture Insurance Scheme (NAIS) and (Modified) NAIS

This is an article that surveys the need, pros & cons, and performance of crop insurance in India, and more specifically NAIS, MNAIS, and Pradhan Mantri Fasal Bima Yojna. The article will begin by discussing the need for NAIS and the design of policy. After which, we will provide the shortcomings and policy suggestions to overcome the same. Finally, the article will conclude by linking the need for crop insurance in the context of rural credit markets.

An Assessment of Loans and Advances, Business Advisory Services, and Their Effects on Rural Development Among Rural Banks in Wenchi Municipality

Ghana, like other Sub-Saharan African countries, has generally experienced low productivity, low-income levels, low local reserve funds, and unemployment. The entire rural population of Ghana is about 45.32 percent of the total population of Ghana. However, due to inadequate credit supply and lack of business consulting services, rural people face problems. Initially, sources of rural credit include institutional and non-institutional. The non-institutional credit is provided by money lenders, relatives, friends, traders, commission agents, and cooperatives, which attract very high-interest rates. This, therefore, brought about the idea of the rural bank in 1976 with the aim of channeling financial credit to rural dwellers for the promotion of local ventures and accelerated development in these areas in order to raise the standard of living of rural dwellers. This present study assessed the relationship between loans and advances and business advisory services of rural banks towards rural development in the Wenchi municipality. The descriptive research design was employed and questionnaires.was used for collecting data from respondents. The study used stratified random sampling and accidental/convenience sampling to select a sample size of 609, comprising of 9 staff and 600 customers of the banks. The study revealed that there was a strong but inverse relationship between loans and advances that were given to customers and the performance of the rural banks in rural development. The study also found out that there was a positive correlation between the status of business advisory services in rural banks and rural development. With respect to the challenges the rural banks face in granting loans and advances, it was revealed that high-interest rate, high default rate, and lack of collateral security were major challenges encountered by the banks in providing loans and advances to rural dwellers to improve on rural development. The study recommended that rural banks should place much emphasis on developing the facility of business advisory services to assist and support rural dwellers on how to manage their finances properly in order to translate into developing rural areas. Keywords: Loans and Advances, Business Advisory Services, Rural Development. DOI: 10.7176/RJFA/11-12-12 Publication date: June 30th 2020

Commercialization and Mission Drift in Microfinance: Implications for Rural India

The emergence of microfinance has been justified as a measure to occupy the empty space that was created with the retreat of formal banking as part of structural and neoliberal reforms for rural India in post-1990s. Worldwide, although the microfinance institution (MFI) has been flouted to provide credit to unbanked areas with the broader objectives of empowering people and eventually eradicating poverty, there is much disagreement among scholars regarding its actual achievements toward these goals. While some scholars are of the opinion that MFIs are currently in a phase of “mission drift”, based on their increasing commercialization, others argue that these institutions have been always driven by the neoliberal principles of maximizing profit. In view of the globally demonstrated changes in the features and operations of MFIs, this paper uses evidence from secondary data sources to flag the changing trends in credit market with particular reference to MFIs in India. We argue that these changes provide evidence of a mission drift in microfinance that must be critically examined against the backdrop of a chronic and persistent credit crisis in rural India, which may get further exacerbated by the increasing dominance of private credit players. At this juncture, instead of taking lessons and rectifying the existing lapses in enabling rural credit, the reorientation of the MFI’s credit-delivery operation toward commercialization must be seen as a perilous step that could close the door of affordable credit to poor and petty borrowers. Chronic bottlenecks in credit delivery must be addressed through more permanent and holistic solutions.

Determinants of Farming Households’ Credit Accessibility in Rural Areas of Vietnam: A Case Study in Haiphong City, Vietnam

The role of agricultural sectors in the economic development of a country is undeniable, especially in developing and least-developed ones, ensuring food supply, increasing national income, export earnings and poverty reduction. Vietnam is known as an emerging market, depending directly on agriculture-related activities for their livelihood, in which the issue of rural credit access still remains a confounding problem. The paper focuses on identifying the determinants of credit access in rural areas of Vietnam using Haiphong city as a case study, including formal and informal credit. The paper uses data collected from a survey of 180 rural households in a district of Haiphong city. The probit and linear regression models are applied to investigate the factors that determine household credit accessibility, i.e., the household’s decision to borrow and borrowing amounts. Results of this analysis reveal the different significant determinants of formal and informal credit market access. Group membership and connection are found to have significantly strong impacts on formal credit accessibility while informal credit access is strongly influenced by agriculture income and dependency ratio. The implications of these findings for enhancing formal credit accessibility and decreasing the dependence on informal markets are discussed.

Forest regeneration in the Brazilian Amazon: Public policies and economic conditions

Secondary vegetation is the land use that has increased the most in the Brazilian Amazon in recent years. Approximately 49% of the increase in the total area since the mid-2000s was due to forest regeneration. In this context, the present study aimed to evaluate how environmental policies and economic conditions have influenced forest regeneration in the Amazon biome. This study is based on the Forest Transition theory, which is associated to a long-term phenomenon in which a decline in primary forest area is followed by forest regeneration. We used panel data procedures to estimate several models to assess sources of forest regeneration. Our results indicate that variables associated to secondary forest change are the value and intensity of fines, rural credit, agricultural share of GDP, and agricultural and extractive prices. We conclude that public policies that impose fines to combat illegal deforestation favored an increase in forest regeneration, which was an environmentally positive spillover effect as these policies may promote second forest regeneration as well as decreases in deforestation.

Land use and land cover scenarios: An interdisciplinary approach integrating local conditions and the global shared socioeconomic pathways

Land Use and Land Cover (LULC) changes have profound impacts on the functioning of (agro)ecosystems and have potential to mitigate global climate change. However, we still lack interdisciplinary methods to project future LULC scenarios at spatial scales that are relevant for local decision making and future environmental assessments. Here we apply an interdisciplinary approach to develop spatially explicit projections of LULC at a resolution of 30 × 30 m informed by historic relationships between LULC and their key drivers, within the context of the four qualitative scenarios of global shared socioeconomic pathways. We apply this methodology to a case study in the Zona da Mata, Brazil, which has a history of major LULC changes. The analysis of LULC changes from 1986 to 2015 indicates that pasture area decreased from 76 to 58 % of total area, while forest areas increased from 18 to 24 %, and coffee from 3 to 11 %. Environmental protection legislation, rural credit for smallholder farmers, and demand for agricultural and raw products were identified as main drivers of LULC changes. Projected LULC for 2045 strongly depends on the global socioeconomic pathway scenarios, and forest and coffee areas may increase substantially under strong government measures in the environmentally conscious Green Road scenario or decrease in the high consumption Rocky Road scenario. Our study shows that under the set of drivers during the past three decades reforestation can go hand in hand with increase of agricultural production, but that major and contrasting changes in LULC can be expected depending on the socioeconomic pathway that will be followed in the future. To guide this process, LULC scenarios at the local scale can inform the planning of local and regional development and forest conservation.

Does Access to Rural Credit Help Decrease Income Inequality in Brazil?

AbstractAgricultural production in Brazil has increased in recent decades. Despite this, the rural population continues to face income inequality. Policies targeting this issue, such as rural credit, have been implemented during this period. This study estimates the influence of credit on income inequality in Brazilian rural areas. Results suggest that the family farming credit program (PRONAF) is not associated with increase in inequality. However, access to rural credit from sources other than PRONAF has led to greater household income inequality. Results also indicate that greater levels of education and access to rural extension have boosted the effect of credit on income.

Analysis of Buffalo Market Setting in the State of Pará, Brazilian Amazon

The objective of this study was to analyze the structure and conjuncture of the buffalo breeding tendency in the state of Pará, in order to generate relevant information for decision-making of farmers involved in the activity, as well as to guide public policies to stimulate the development sector of Pará’s economy in Brazilian Amazon. The study was conducted using secondary data, collected from the Brazilian Institute of Geography and Statistics (IBGE) Ministry of Agriculture, Livestock and Supply (MAPA), Ministry of Development, Industry and Foreign Trade (MDIC), Getulio Vargas Foundation (FGV), Central Bank of Brazil (BACEN) and the Food and Agriculture Organization of the United Nations (FAO) on the herd, production, price and financing granted to buffalo breeding. The Brazilian buffalo herd is concentrated in the northern region of the country, with 66.15% of the total herd, particularly in the state of Pará, which participates with 37.90% of the Brazilian herd, constituting the largest producing state in Brazil. In this state, the activity is concentrated in the Marajó meso-regions and in the Lower Amazon. In addition, it was found that the volume of rural credit granted to buffalo herd projects, fluctuated from 1995 to 2015, concentrating in the period from 2004 to 2007, stimulated by the expansion of cattle raising at pasture due to Bovine Spongiform Encephalopathy (BSE), a disease triggered in Europe over that period.

Application of Gronroos’ Service Quality Model in Co-Operative Banks : An Exploratory

Bank plays an important role in Indian Financial system. The business of banking can grow with attracting and retaining customers. Financial business works more on retaining old customers rather than convincing new customers. In India, there is cut throat competition in Banking business as there are many public, private and foreign banks. Banks in India functions under the Umbrella of Reserve Bank of India which is the regulatory body. Banking segment broadly consists of Commercial Banks, Private Banks & Cooperative banks. Cooperative banks in India serve an important role in Indian Economy especially in rural areas of our country. In urban areas focus of Cooperative banks is mainly to serve the purpose of small industries and self-employed people. Cooperative Banks are regulated by Reserve Bank of India under Banking Regulation Act, 1949 and registered under urban cooperative Society Act, 1949. They are organized and managed on the principal of co-operation. Mutual trust and confidence are the pillars of Cooperative banks to work in local areas. The main objective of co-operative bank is to provide rural credit. The representation of Co-operative Credit Societies Act, 1904, gave the real push to the movement of Cooperative Banks in India. Co-operative Bank in India has a history of more than 100 years.

Factors influencing Indonesian rural banks' credit disbursement

Distribution of microcredits has a great opportunity, considering micro-businesses in Indonesia reaches 98 percent of all types of businesses. Microlending has become the leading market share for BPR s to channel their funds. This research aims to identify factors that effect the increase of micro-credit disbursements. This study uses a Vector Error Correction Model (VECM) method with a type of monthly time series data from 2012 to 2018. The sample of this study is the Rural Credit Banks. The results of this study explain that the BPR non-performing loan (NPL) variable, both in the long term and short term, does not significantly influence the increase in micro-credit distribution. In contrast, the variable spread in the short term and long term shows a significant positive effect on increasing microcredit distribution. Forecasting for variable increases in credit distribution fluctuates with a downward trend. The NPL variable has an increasing trend, and it is projected that the next 90 months will reach 12 percent. The spread variable has a downward trend for the next 40 months which then the trend will continue to increase for the next 90 months. JEL Classification: D13, I31, J22 How to Cite: Murningsih, S., Firdaus, M., & Purwanto, B. (2020). Factors influencing Indonesian rural banks’ credit disbursement. Jurnal Keuangan dan Perbankan, 24 (2),189-201. DOI : https://doi.org/10.26905/jkdp.v24i2.3778

The Nexus between Credit Channels and Farm Household Vulnerability to Poverty: Evidence from Rural China

It is well known that finance is at the core of economic activities, and rural finance is an important force for agricultural development, rural economic growth, and farmer income growth, but how rural credit affects vulnerability to poverty of farm households is not yet known. The study on the nexus between the credit channels and vulnerability to poverty can not only realize targeted poverty alleviation but also promote sustainable rural development. This study measures vulnerability to poverty of Chinese farm households by three-stage feasible generalized least squares (FGLS) and tests for the impact of two credit channels on farm household’s vulnerability to poverty based on China Household Finance Survey data. We mainly found that the proportion of structural poverty in western areas is comparatively large, and risky poverty of farm households in eastern areas is relatively serious. The high education cost may be an important factor in farm household poverty; the cost-effectiveness of education is higher than that of earnings. Farm household vulnerability to poverty with folk loans is 0.2% higher than that of farm households without private credit; however, this is not significant. Farm household vulnerability to poverty with bank credit is 0.4% lower than households without bank credit, which is significant. For farm households who have a higher level of vulnerability to poverty, the effect of bank credit on reducing vulnerability to poverty is greater. Moreover, we replaced the vulnerability-to-poverty variable with a more rigid indicator to test the relationship between the credit channels and vulnerability to poverty and got the same results as before.

Financial Appraisal of RRBs: Evidence from Eastern Uttar Pradesh

India’s major population lives in rural area and adequate financial credit supply are much needed for speedy economic development of this region. Regional Rural Banks (RRBs) was established with the objective to provide financial support in rural areas. RRBs have been working as an economic agent and disbursing loan to the rural people since its inception. RRBs have performed to a great extent in terms of rural credit disbursement but Non Performing Assets (NPA) has become a key trouble. For the last few years RRBs have been facing a primary challenge of mounting NPAs, which is clogging the smooth credit supply in the rural areas. The present study aims to analyze the loan disbursement towards agriculture sector, overdue and NPAs of RRBs working in Eastern Uttar Pradesh.

What Do Banks, Rural Credit Institutions, and Regulators Infer from the Current Strengths and Standing of Indonesian SMEs?

This study investigates whether the Indonesian regulators control Indonesian small and medium-sized enterprises (SMEs) with matching or mismatching empowerment strategies, in light of their strengths and current standing. Indonesian SMEs contributed approximately 60.34% to Indonesia’s gross domestic product (GDP) in 2018. In addition, Indonesian regulators have focused on financial support through credit policies and tax incentives. Indonesian SMEs have been standing on organizational readiness and readiness for change, based on their social networks and social cognition. It collected thirteen informants with different expertise and experiences. This study’s results suggest Indonesia’s regulatory body and financial institutions should consider the SMEs’ social cognition and organizational readiness for change. According to the current situation, to empower Indonesian SMEs, we recommend strategies such as achieving knowledge supremacy, creating an economic development board, as in Singapore, formulating comprehensive industry-wide policies, adopting omnibus laws, and implementing a shifting balance strategy. In other words, the Indonesian regulators should implement major reforms, which are similar to glasnost and perestroika in the former Soviet Union. This is to enhance Indonesian SMEs and achieve the goal of the Government of Indonesia (GoI) with respect to the optimal distinctiveness of Indonesia’s future economy. This optimal distinctiveness refers to the GoI’s policies, which focused on knowledge supremacy, an industry-wide regime, and research for empowerment.

Human Capital, Social Capital, and Farmers’ Credit Availability in China: Based on the Analysis of the Ordered Probit and PSM Models

Rural credit is very important to the increase of farmers’ income and the development of rural economy, and it has attracted wide attention from scholars. Many scholars have paid attention to the impact of social capital on farmers’ credit availability, but the research conclusions have not yet been unified. In addition, human capital is also one of the important factors that scholars pay attention to. However, the research mainly focuses on farmer education and pays less attention to their health. Based on the China Household Income Project (CHIP2013) database, we evaluated the impact of human capital (education and health of farmers) and social capital on the credit availability of farmers. To ensure the robustness of our results, we used both the ordered probit model and the propensity score matching (PSM) model to carry out the estimations. Therefore, the study not only improves the research framework of the impact of human capital on farmers’ credit availability, but also uses a more accurate method to estimate the net impact of social capital on farmers’ credit availability. The results showed that, firstly, in terms of human capital, farmers’ educational and health levels have a significant positive impact on their formal credit availability, but no significant impact on their informal credit availability. In particular, farmers with a high school education or above are more likely to obtain a formal loan. Secondly, in terms of social capital, interpersonal relationship capital and political relationship capital are beneficial for farmers obtaining loans from formal and informal channels. Organizational relationship capital only has a more significant positive impact on the informal credit availability of farmers. These results imply that formal financial institutions not only pay attention to farmers’ human capital but also their social capital to reduce the risk of lending. However, informal lenders, that is, relatives or friends, pay more attention to the social capital of farmers.

RETRACTED ARTICLE: Risk analysis method of bank microfinance based on multiple genetic artificial neural networks

As a supplement to the financing of small- and medium-sized enterprises, bank microfinance companies are nonbank financial institutions, and it has played an active role in maintaining the stability of financial markets. However, in the course of the operation of microfinance companies, due to the lack of careful management and risk control, the problem of risk management has become increasingly prominent. The purpose of this paper is to study the microfinance risk based on polygenic artificial neural network, and it provides theory and practice application for risk management of microcredit enterprises. Taking the risk management of China’s microfinance companies as the research object, on the basis of previous studies, this paper analyzes the risks of bank microfinance companies. Secondly, the basic theory of neural network model and its transformation function are introduced, and the learning method of neural network. At the same time, the learning algorithm of neural network and its improved algorithm are mainly introduced. It lays a theoretical foundation for the follow-up empirical research. Then, through the empirical study of data-based risk assessment of microcredit of farmers, the sample data are divided into training samples and test samples for comparison. Then, we use MATLAB software to establish a neural network model for farmers’ microcredit risk assessment. Finally, in order to make the neural network model of farmers’ credit risk assessment better popularize and apply, and effectively reduce the credit risk of farmers’ microcredit. The corresponding policy suggestions are put forward, which proves the validity and applicability of the neural network in the field of farmers’ microcredit risk assessment. It provides a good basis for rural credit cooperatives to identify the credit risk of farmers.