Impact of credit risk on farm planning in Chiang Mai Valley, Thailand
The risk elements inherent in farming not only influence production strategies but also borrowers decision to invest capital and the willingness of lenders to supply capital. Risk associated with costs and availability of credit is an added element of farmers' portfolio risk, which can influenc...
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Universiti Putra Malaysia Press
2003
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Online Access: | http://psasir.upm.edu.my/id/eprint/3408/1/Impact_of_Credit_Risk_on_Farm_Planning_in_Chiang_Mai_Valley%2C_Thailand.pdf http://psasir.upm.edu.my/id/eprint/3408/ http://www.pertanika.upm.edu.my/view_archives.php?journal=JSSH-11-1-3 |
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my.upm.eprints.34082015-09-11T06:45:07Z http://psasir.upm.edu.my/id/eprint/3408/ Impact of credit risk on farm planning in Chiang Mai Valley, Thailand Mohamed, Zainal Abidin Thani, Pichit Chiew, Eddie Fook Chong The risk elements inherent in farming not only influence production strategies but also borrowers decision to invest capital and the willingness of lenders to supply capital. Risk associated with costs and availability of credit is an added element of farmers' portfolio risk, which can influence debt use and the resulting capital structure. Portfolio theory suggests that the model farm's risk-efficient optimal solutions, derived without credit risk, have a concentrated mix of activities. Incorporation of risk will cause a nonparallel shift of the efficient set towards higher variances for each expected value of the objective function. This study was undertaken to measure credit availability in response to risk in farm operations and its impact on risk-averse farmers by utilising a multiperiod risk-programming model. The model emphasises the relationships between credit risks and farm income risk and is used to generate risk-efficient farm plans for representative farms in Chiang Mai Valley. The risk-programming results obtained are consistent with anticipated responses. The inclusion of credit risk takes a fuller account of the overall risk positions of farmers. As risk-aversion increases as a percentage of total for both capital and operating loans, no capital loans occur at the highest risk-aversion level, leaving intact the entire reserve of capital credit. A set of 13 efficient portfolios in the intermediate portion of the E-V frontier was also generated from the risk-programming model. Universiti Putra Malaysia Press 2003-03 Article PeerReviewed application/pdf en http://psasir.upm.edu.my/id/eprint/3408/1/Impact_of_Credit_Risk_on_Farm_Planning_in_Chiang_Mai_Valley%2C_Thailand.pdf Mohamed, Zainal Abidin and Thani, Pichit and Chiew, Eddie Fook Chong (2003) Impact of credit risk on farm planning in Chiang Mai Valley, Thailand. Pertanika Journal of Social Sciences & Humanities, 11 (1). pp. 97-106. ISSN 0128-7702; ESSN: 2231-8534 http://www.pertanika.upm.edu.my/view_archives.php?journal=JSSH-11-1-3 |
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The risk elements inherent in farming not only influence production strategies but also borrowers decision to invest capital and the willingness of lenders to supply capital. Risk associated with costs and availability of credit is an added element of farmers' portfolio risk, which can influence debt use and the resulting capital structure. Portfolio theory suggests that the model farm's risk-efficient optimal solutions, derived without credit risk, have a concentrated mix of activities. Incorporation of risk will cause a nonparallel shift of the efficient set towards higher variances for each expected value of the objective function. This study was undertaken to measure credit availability in response to risk in farm operations and its impact on risk-averse farmers by utilising a multiperiod risk-programming model. The model emphasises the relationships between credit risks and farm income risk and is used to generate risk-efficient farm plans for
representative farms in Chiang Mai Valley. The risk-programming results obtained are consistent with anticipated responses. The inclusion of credit risk takes a fuller account of the overall risk positions of farmers. As risk-aversion increases as a percentage of total for both capital and operating loans, no capital loans occur at the highest risk-aversion level, leaving intact the entire
reserve of capital credit. A set of 13 efficient portfolios in the intermediate portion of the E-V frontier was also generated from the risk-programming model. |
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Article |
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Mohamed, Zainal Abidin Thani, Pichit Chiew, Eddie Fook Chong |
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Mohamed, Zainal Abidin Thani, Pichit Chiew, Eddie Fook Chong Impact of credit risk on farm planning in Chiang Mai Valley, Thailand |
author_facet |
Mohamed, Zainal Abidin Thani, Pichit Chiew, Eddie Fook Chong |
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Mohamed, Zainal Abidin |
title |
Impact of credit risk on farm planning in Chiang Mai Valley, Thailand |
title_short |
Impact of credit risk on farm planning in Chiang Mai Valley, Thailand |
title_full |
Impact of credit risk on farm planning in Chiang Mai Valley, Thailand |
title_fullStr |
Impact of credit risk on farm planning in Chiang Mai Valley, Thailand |
title_full_unstemmed |
Impact of credit risk on farm planning in Chiang Mai Valley, Thailand |
title_sort |
impact of credit risk on farm planning in chiang mai valley, thailand |
publisher |
Universiti Putra Malaysia Press |
publishDate |
2003 |
url |
http://psasir.upm.edu.my/id/eprint/3408/1/Impact_of_Credit_Risk_on_Farm_Planning_in_Chiang_Mai_Valley%2C_Thailand.pdf http://psasir.upm.edu.my/id/eprint/3408/ http://www.pertanika.upm.edu.my/view_archives.php?journal=JSSH-11-1-3 |
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