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1 – 10 of 958Research on agribusiness loan success and failure has been limited, and has typically adopted the nonagricultural business approach of using financial ratios to predict loan…
Abstract
Research on agribusiness loan success and failure has been limited, and has typically adopted the nonagricultural business approach of using financial ratios to predict loan success, with success rates generally ranging from 60 to 80%. This study uses primary loan data to test the financial and nonfinancial characteristic differences between unsuccessful and successful agribusiness loans. Previous work is augmented by accounting for nonfinancial characteristics, including lender and agribusiness manager experience that resulted in an improved model prediction success rate of 97.5%. A unique result is the identification of a significant combined experience variable comprised of the loan officer’s experience and the agribusiness manager’s experience. Findings further suggest that agribusiness lenders could benefit from incorporating experience into the loan portfolio management process.
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The purpose of this paper is to investigate the relationship between religious beliefs and socially responsible investment in the Indian agricultural industry.
Abstract
Purpose
The purpose of this paper is to investigate the relationship between religious beliefs and socially responsible investment in the Indian agricultural industry.
Design/methodology/approach
Owners of small agribusiness firms from India were interviewed regarding their perceptions of religious beliefs and socially responsible investment in the agricultural industry.
Findings
The survey indicates that while religious beliefs and internal financing sources increase perceived socially responsible investment, the higher cost of debt capital decreases perceived socially responsible investment in the Indian agricultural industry. The higher level of internal financing sources, however, decreases the perceived cost of debt capital which may increase socially responsible investment in the Indian agricultural industry.
Research limitations/implications
This is a co-relational study that investigated the association between religious beliefs and socially responsible investment. There is not necessarily a causal relationship between the two. The findings of this study may only be generalized to firms similar to those that were included in this research.
Originality/value
This study contributes to the literature on the factors that increase socially responsible investment in the agricultural industry. The study also provides critical policy recommendations to minimize managerial implications. The findings may be useful for financial managers, agribusiness owners (farmers), investors, agribusiness management consultants, and other stakeholders.
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Kristin Franklin and James Oehmke
The purpose of this paper is to analyze the social institutions of trust, accountability and corporate shared value in creating an enabling environment for private sector…
Abstract
Purpose
The purpose of this paper is to analyze the social institutions of trust, accountability and corporate shared value in creating an enabling environment for private sector investment in African agricultural and food systems.
Design/methodology/approach
This paper uses mixed methods. A value chain framework models interactions among stakeholders in the agriculture, agribusiness and food sectors. The social institutions of accountability and trust are introduced into the model, followed by a Rwanda premium coffee value chain case study.
Findings
The conceptual and case study results show that best practices can increase smallholder farmer, agricultural service provider, financial intermediary, and food processor investments in and benefits from the agriculture sector.
Research limitations/implications
Further research is needed on the economic foundations of development cooperation based on trust, accountability and shared values, best practices and the link with desired societal outcomes, such as the sustainable development goals.
Social implications
Mutual accountability processes, as they are maturing in Africa, are at the cutting edge of creating processes where multiple stakeholders, including agribusiness, can come together to make joint commitments to a shared development agenda, and where stakeholders hold themselves and others accountable for meeting these commitments.
Originality/value
This is the first paper to bring together cutting-edge advances in corporate shared values, trust and accountability in the context of African agricultural and agribusiness development.
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The Imo State Supervised Agricultural Credit Loans Board (ISACLB) has outright default rates of more than 50 percent. Thus, the purpose of this study is to identify the major…
Abstract
Purpose
The Imo State Supervised Agricultural Credit Loans Board (ISACLB) has outright default rates of more than 50 percent. Thus, the purpose of this study is to identify the major characteristics of the Board's beneficiaries who completely failed to honour their repayment commitment as opposed to those who partially repaid.
Design/methodology/approach
Data on 36 potential causes of delinquency were collected through questionnaires distributed to 182 defaulters across ISACLB's three regional zones from 1987 to 1997; ISACLB's only completed loan cycle. Descriptive statistics were obtained using the odds ratio technique. Thereafter, a binary logistic regression estimated the marginal effect on the outright default probabilities of each factor.
Findings
ISACLB's large overdue problem was strongly linked to four key factors: age of borrowers, frequency of visits by loan officers‐cum‐extension agents, amount of savings deposits with informal clubs and total annual savings.
Research limitations/implications
The primary drawback is the small size of the sample study, as well as the failure to correctly classify the partial defaulters in terms of the stage in the loan cycle at which they actually ceased to repay.
Practical implications
In general, initiatives to attract young entrepreneurs, as well as to incorporate a FINCA‐type savings scheme into the design of ISACLB's future lending programme should help to resolve its overdue dilemma.
Social implications
Older traditional farmers are the principal defaulters. A targeted monitoring, training and information provision appears to be required.
Originality/value
There are very few econometric studies dealing specifically with the characteristics of outright and partial microcredit defaulters.
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Ernest Christlieb Amrago and Nicholas Oppong Mensah
The purpose of this study is to examine trade credit from agrochemical vendors as an alternative source of finance for cabbage producers in the Bono East Region of Ghana. The…
Abstract
Purpose
The purpose of this study is to examine trade credit from agrochemical vendors as an alternative source of finance for cabbage producers in the Bono East Region of Ghana. The determinants of trade credit supply and impact on cabbage producer’s profitability are investigated.
Design/methodology/approach
The study sample size is 260. The perception index, probit regression, negative binomial regression and the propensity score matching (PSM) was employed to assess the perception of trade credit, factors influencing trade credit supply and the impact of trade credit supply on the cabbage producer’s profitability and agrochemical vendor’s welfare respectively.
Findings
The perception index analysis revealed that the agrochemical vendors, in general, had a positive perception of trade credit. Different groups of factors influence trade credit supply. Further along, the number of times trade credit was used by the cabbage producers was influenced by several factors. On the PSM result, trade credit use had a significant positive impact on the cabbage producer’s profitability. In detail, all the matching estimations revealed that profitability increased above Gh¢ 4,000.00 (US$ 692.04). Likewise, the robustness check result (Inverse Probability Weighted Regression Adjustment (IPWRA)), was no different from the matching estimations. Generally, the result indicates that the impact of trade credit supply on the agrochemical vendor's welfare using total household expenditure, total savings and income as proxy variables for welfare were positive.
Originality/value
Trade credit has encountered less attention in the agricultural finance discourse; however, this study makes an imperative contribution on the same. Specifically, the study reveals the determinants of trade credit supply from agrochemical vendors and a positive impact of trade credit use on the cabbage producer’s profitability, a result which has not been investigated in the trade credit literature.
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Marketing of financial products.
Abstract
Subject area
Marketing of financial products.
Study level/applicability
Graduate level. Occasionally, for undergraduate students with a strong background on branding strategies and strategic analysis. Applicable to analyze how companies can improve their branding strategies in highly regulated industries.
Case overview
In 2016, Claire Solís was discussing with her team the paths to ignite growth and brand awareness of the only digital bank in Mexico. To better position the brand on the Mexican financial market, Bankaool had decided to go 100 per cent online, a branch-less institution. The case presents a condensed history of banking and the shifts in digital consumer behavior. As the case continues, Bankaool products are introduced along with some concerns to keep the business going, particularly, regarding the bank’s health and further growth. The newly appointed CMO and her team have to decide next steps to boost product growth just before the Fintech industry grows more mature and competitive – a scenario of more complex decisions. While they reckoned the potential of Bankaool in sales for the short term, they also need a strategy to position the Bankaool brand in the long term while they struggle with a need to accelerate growth and generate a return for investors.
Expected learning outcomes
To understand the launching of a new bank in the digital arena. To understand consumer behavior in a setting of increasingly higher digital coverage and diffusion of smart devices. To recognize that brand value goes well beyond product development and launch. To gain awareness on the perks and perils of a digital-only bank.
Supplementary materials
Teaching Notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.
Subject code
CSS 8: Marketing.
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Greg A. Lyons and Jackson Takach
This paper uses novel data from a secondary market to assess how loans from nontraditional agricultural real estate lenders (NARELs) differ from traditional sources. Over $2…
Abstract
Purpose
This paper uses novel data from a secondary market to assess how loans from nontraditional agricultural real estate lenders (NARELs) differ from traditional sources. Over $2 billion in loans from these entities were purchased by the secondary market between 2011 and 2020, but a lack of data has prevented a robust understanding of how these institutions operate.
Design/methodology/approach
The authors review loans from nontraditional lenders through their lifecycle in the secondary market from application to purchase and performance.
Findings
This paper finds no observable differences between nontraditional and traditional volumes with regards to borrower credit characteristics, loan approval rates, interest margins and loan performance. It finds significant differences between loan volumes and variable rate product use.
Originality/value
This is the first paper to use internal lender data to review nontraditional agricultural real estate loans and is the first analysis of nontraditional agricultural volumes in the secondary market.
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In recent years, the application of credit scoring in urban microfinance institutions (MFIs) became popular, while rural MFIs, which mainly lend to agricultural clients, are…
Abstract
Purpose
In recent years, the application of credit scoring in urban microfinance institutions (MFIs) became popular, while rural MFIs, which mainly lend to agricultural clients, are hesitating to adopt credit scoring. The purpose of this paper is to explore whether microfinance credit scoring models are suitable for agricultural clients, and if such models can be improved for agricultural clients by accounting for precipitation.
Design/methodology/approach
This study merges two data sets: 24,219 loan and client observations provided by the AccèsBanque Madagascar and daily precipitation data made available by CelsiusPro. An in- and out-of-sample splitting separates model building from model testing. Logistic regression is employed for the scoring models.
Findings
The credit scoring models perform equally well for agricultural and non-agricultural clients. Hence, credit scoring can be applied to the agricultural sector in microfinance. However, the prediction accuracy does not increase with the inclusion of precipitation in the agricultural model. Therefore, simple correlation analysis between weather events and loan repayment is insufficient for forecasting future repayment behavior.
Research limitations/implications
The results should be verified in different countries and climate contexts to enhance the robustness.
Social implications
By applying scoring models to agricultural clients as well, all clients can benefit from an improved risk assessment (e.g. faster decision making).
Originality/value
To the best of the authors’ knowledge, this is the first study investigating the potential of microfinance credit scoring for agricultural clients in general and for Madagascar in particular. Furthermore, this is the first study that incorporates a weather variable into a scoring model.
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Bruce L. Dixon, Bruce L. Ahrendsen, Brandon R. McFadden, Diana M. Danforth, Monica Foianini and Sandra J. Hamm
The purpose of this paper is to apply duration methods to a sample of Farm Service Agency (FSA) direct, seven‐year operating loans to identify those variables that influence the…
Abstract
Purpose
The purpose of this paper is to apply duration methods to a sample of Farm Service Agency (FSA) direct, seven‐year operating loans to identify those variables that influence the time to loan termination and type of termination. Variables include both those known at time of loan origination and those that characterize the changing economic environment over the life of the loan. Also, to examine the impact of various FSA programs promoting policy objectives.
Design/methodology/approach
A systematic sample of 877 seven‐year, FSA direct loans originated between October 1, 1993 and September 30, 1996 was collected. Cox regression, competing risks models are estimated as a function of borrower and loan characteristics observable at loan origination. Economic indicator variables emphasizing the farm economy and observed quarterly over the life of the loan are also included as explanatory variables.
Findings
Loan characteristics, borrower financial characteristics and degree of borrower interaction with FSA observable at origin are significant variables in determining type of loan outcome (default or paid‐in‐full) and time to outcome. Changes in the economic environment and farm economy during the life of the loan are significant.
Research limitations/implications
The sample consists only of FSA direct loans which implies borrowers are at financial margin. Application of method to agricultural loans from conventional commercial lenders could identify different significant factors.
Practical implications
Using length of time to loan termination instead of just type of outcome provides for a richer analysis of loan performance. Loan performance over time is influenced by the larger economy and should be incorporated into loan performance modeling.
Originality/value
The study described in the paper demonstrates use of competing risks models on intermediate agricultural loans and develops how this technique can be used to learn about dynamic aspects of loan performance. Sample consists of observations on individual FSA direct loan borrowers. The FSA direct loan program is the major source of credit for agricultural borrowers at the financial margin.
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Since the 2015 introduction of the United Nations Global Goals, also referred to as the sustainable development goals (SDGs), we have witnessed a movement toward inclusion of…
Abstract
Since the 2015 introduction of the United Nations Global Goals, also referred to as the sustainable development goals (SDGs), we have witnessed a movement toward inclusion of goal-related initiatives listed under CSR strategy and in CSR sustainability reports. At the time of writing this chapter, the United Nations were presented a speech by young activist Greta Thunberg and many other activists commenced riots in major cities. All are pointing toward, what they perceive, as a lack of effort to solve issues related to climate warming. At the same time new research has revealed that targets for the SDGs are falling behind levels expected for 2030. There has also been concern for the potential of “SDG washing,” reported in the academic literature. This would greatly decrease the credibility of the goals over time. For this reason, it is vitally important to measure the impact of initiatives introduced to fit each SDG category and label. This will also assist with funding SDG implementation at a much faster rate. This chapter commences with a brief introduction of the SDG framework and discusses the United Nations and OECD methodology and the development and implementation of key global goals. Various research reports are discussed alongside a tracking study on uptake of the SDGs, and the need for SDG metrics to create transparency and evaluation. The chapter ends with example case studies of CSR strategy implementing and measuring the SDGs, alongside a discussion of financial vehicles released to support further development. The chapter also makes suggestions for future research opportunities to assist SDG progression.