IDEAS home Printed from https://ideas.repec.org/a/caa/jnlage/v70y2024i11id434-2023-agricecon.html
   My bibliography  Save this article

Credit evaluation and rating system for farmers' loans in the context of agricultural supply chain financing based on AHP-ELECTRE III

Author

Listed:
  • Shangjia Guo

    (College of Economics and Management, Northwest Agricultural and Forestry University, Yangling, P. R. China)

  • Rong Niu

    (College of Economics and Management, Northwest Agricultural and Forestry University, Yangling, P. R. China)

  • Yanbo Zhao

    (College of Economics and Management, Northwest Agricultural and Forestry University, Yangling, P. R. China)

Abstract

Farmers, often vulnerable within the agricultural supply chain, frequently encounter difficulties accessing and affording loans. This study introduces an innovative credit risk evaluation framework for farmers tailored to the agricultural supply chain. It includes three key aspects: farmers' credit characteristics, the operational status of the agricultural supply chain, and overall credit conditions. Initially, the analytic hierarchy process (AHP) was used to assign weight coefficients to indicators. Then, the Elimination et Choix Traduisant la Réalité III (ELECTRE III) model was employed to determine farmers' credit ratings. To demonstrate the impact of the agricultural supply chain on microfinance, the model's effectiveness was then tested with 398 microfinance survey responses from Fuping County (World Dairy Goat Industry Development Demonstration Zone), Shaanxi Province, China, and its accuracy was further verified using BP neural network analysis. The results demonstrated the model's proficiency in assessing farmers' credit levels within the agricultural supply chain, which can aid in the resolution of various credit assessment and rating challenges. Furthermore, this study offers valuable insights into the integration of multi-criteria decision-making and machine-learning methods.

Suggested Citation

  • Shangjia Guo & Rong Niu & Yanbo Zhao, 2024. "Credit evaluation and rating system for farmers' loans in the context of agricultural supply chain financing based on AHP-ELECTRE III," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 70(11), pages 541-555.
    • Handle: RePEc:caa:jnlage:v:70:y:2024:i:11:id:434-2023-agricecon
    DOI: 10.17221/434/2023-AGRICECON
    as

    Download full text from publisher

    File URL: http://agricecon.agriculturejournals.cz/doi/10.17221/434/2023-AGRICECON.html
    Download Restriction: free of charge
    File URL: http://agricecon.agriculturejournals.cz/doi/10.17221/434/2023-AGRICECON.pdf
    Download Restriction: free of charge
    File URL: https://libkey.io/10.17221/434/2023-AGRICECON?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Govindaray N. Nayak & Calum G. Turvey, 1997. "Credit Risk Assessment and the Opportunity Costs of Loan Misclassification," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 45(3), pages 285-299, November.
    2. Srinivasan, Venkat & Bolster, Paul J., 1990. "An industrial bond rating model based on the Analytic Hierarchy Process," European Journal of Operational Research, Elsevier, vol. 48(1), pages 105-119, September.
    3. Wenli Cheng & Nan Zhou & Longyao Zhang, 2021. "How does land titling affect credit demand, supply, access, and rationing: Evidence from China," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 69(3), pages 383-414, September.
    4. Papadopoulos, Agis & Karagiannidis, Avraam, 2008. "Application of the multi-criteria analysis method Electre III for the optimisation of decentralised energy systems," Omega, Elsevier, vol. 36(5), pages 766-776, October.
    5. Luca Zanin, 2022. "Estimating the effects of ESG scores on corporate credit ratings using multivariate ordinal logit regression," Empirical Economics, Springer, vol. 62(6), pages 3087-3118, June.
    6. Edward Knopf & Richard Schoney, 1993. "An Evaluation of Farm Financial Benchmarks and Loan Success/Failure: The Case of the Agricultural Credit Corporation of Saskatchewan," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 41(1), pages 61-69, March.
    7. Galo, Nadya Regina & Calache, Lucas Daniel Del Rosso & Carpinetti, Luiz Cesar Ribeiro, 2018. "A group decision approach for supplier categorization based on hesitant fuzzy and ELECTRE TRI," International Journal of Production Economics, Elsevier, vol. 202(C), pages 182-196.
    8. Chen, Liang-Hsuan & Chiou, Tai-Wei, 1999. "A fuzzy credit-rating approach for commercial loans: a Taiwan case," Omega, Elsevier, vol. 27(4), pages 407-419, August.
    9. Nowrouz Kohzadi & Milton S. Boyd & Iebeling Kaastra & Bahman S. Kermanshahi & David Scuse, 1995. "Neural Networks for Forecasting: An Introduction," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 43(3), pages 463-474, November.
    10. Angilella, Silvia & Mazzù, Sebastiano, 2015. "The financing of innovative SMEs: A multicriteria credit rating model," European Journal of Operational Research, Elsevier, vol. 244(2), pages 540-554.
    11. Pranith K. Roy & Krishnendu Shaw, 2023. "A credit scoring model for SMEs using AHP and TOPSIS," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(1), pages 372-391, January.
    12. Ao Yu & Zhuoqiang Jia & Weike Zhang & Ke Deng & Francisco Herrera, 2020. "A Dynamic Credit Index System for TSMEs in China Using the Delphi and Analytic Hierarchy Process (AHP) Methods," Sustainability, MDPI, vol. 12(5), pages 1-21, February.
    13. S. N. Kulshreshtha, 1973. "Discriminating Credit Worthiness Of Canadian Prairie Farmers," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 21(2), pages 16-24, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pranith K. Roy & Krishnendu Shaw, 2023. "A credit scoring model for SMEs using AHP and TOPSIS," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(1), pages 372-391, January.
    2. Carlo Alberto Magni & Stefano Malagoli & Andrea Marchioni & Giovanni Mastroleo, 2020. "Rating firms and sensitivity analysis," Journal of the Operational Research Society, Taylor & Francis Journals, vol. 71(12), pages 1940-1958, December.
    3. Doumpos, Michalis & Figueira, José Rui, 2019. "A multicriteria outranking approach for modeling corporate credit ratings: An application of the Electre Tri-nC method," Omega, Elsevier, vol. 82(C), pages 166-180.
    4. Agnieszka Kuś & Dorota Grego-Planer, 2021. "A Model of Innovation Activity in Small Enterprises in the Context of Selected Financial Factors: The Example of the Renewable Energy Sector," Energies, MDPI, vol. 14(10), pages 1-17, May.
    5. Haurant, P. & Oberti, P. & Muselli, M., 2011. "Multicriteria selection aiding related to photovoltaic plants on farming fields on Corsica island: A real case study using the ELECTRE outranking framework," Energy Policy, Elsevier, vol. 39(2), pages 676-688, February.
    6. Guan, Jialin & Kirikkaleli, Dervis & Bibi, Ayesha & Zhang, Weike, 2020. "Natural resources rents nexus with financial development in the presence of globalization: Is the “resource curse” exist or myth?," Resources Policy, Elsevier, vol. 66(C).
    7. Lin Meng & Wentao Si, 2022. "The Driving Mechanism of Urban Land Expansion from 2005 to 2018: The Case of Yangzhou, China," IJERPH, MDPI, vol. 19(23), pages 1-14, November.
    8. Lupo, Toni, 2015. "Fuzzy ServPerf model combined with ELECTRE III to comparatively evaluate service quality of international airports in Sicily," Journal of Air Transport Management, Elsevier, vol. 42(C), pages 249-259.
    9. Alkan, Ömer & Albayrak, Özlem Karadağ, 2020. "Ranking of renewable energy sources for regions in Turkey by fuzzy entropy based fuzzy COPRAS and fuzzy MULTIMOORA," Renewable Energy, Elsevier, vol. 162(C), pages 712-726.
    10. Noori, Amir & Bonakdari, Hossein & Salimi, Amir Hossein & Gharabaghi, Bahram, 2021. "A group Multi-Criteria Decision-Making method for water supply choice optimization," Socio-Economic Planning Sciences, Elsevier, vol. 77(C).
    11. Catalina, Tiberiu & Virgone, Joseph & Blanco, Eric, 2011. "Multi-source energy systems analysis using a multi-criteria decision aid methodology," Renewable Energy, Elsevier, vol. 36(8), pages 2245-2252.
    12. Kaldellis, J.K., 2011. "Critical evaluation of financial supporting schemes for wind-based projects: Case study Greece," Energy Policy, Elsevier, vol. 39(5), pages 2490-2500, May.
    13. Jain, Richa & Reindorp, Matthew & Chockalingam, Arun, 2023. "Buyer-backed purchase-order financing for SME supplier with uncertain yield," European Journal of Operational Research, Elsevier, vol. 307(2), pages 758-772.
    14. Valentin Bertsch & Wolf Fichtner, 2016. "A participatory multi-criteria approach for power generation and transmission planning," Annals of Operations Research, Springer, vol. 245(1), pages 177-207, October.
    15. Zhang, Weike & Meng, Jia & Tian, Xiaoli, 2020. "Does de-capacity policy enhance the total factor productivity of China's coal companies? A Regression Discontinuity design," Resources Policy, Elsevier, vol. 68(C).
    16. Papapostolou, Aikaterini & Karakosta, Charikleia & Nikas, Alexandros & Psarras, John, 2017. "Exploring opportunities and risks for RES-E deployment under Cooperation Mechanisms between EU and Western Balkans: A multi-criteria assessment," Renewable and Sustainable Energy Reviews, Elsevier, vol. 80(C), pages 519-530.
    17. Saeed Azimi & Mehdi Azhdary Moghaddam, 2020. "Modeling Short Term Rainfall Forecast Using Neural Networks, and Gaussian Process Classification Based on the SPI Drought Index," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 34(4), pages 1369-1405, March.
    18. Jiang, Meishan & Li, Jingrong & Mi, Yunsheng, 2024. "Farmers’ cooperatives and smallholder farmers’ access to credit: Evidence from China," Journal of Asian Economics, Elsevier, vol. 92(C).
    19. Athanasios Kolios & Varvara Mytilinou & Estivaliz Lozano-Minguez & Konstantinos Salonitis, 2016. "A Comparative Study of Multiple-Criteria Decision-Making Methods under Stochastic Inputs," Energies, MDPI, vol. 9(7), pages 1-21, July.
    20. Brocklesby, John, 2009. "Ethics beyond the model: How social dynamics can interfere with ethical practice in operational research/management science," Omega, Elsevier, vol. 37(6), pages 1073-1082, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:caa:jnlage:v:70:y:2024:i:11:id:434-2023-agricecon. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ivo Andrle (email available below). General contact details of provider: https://www.cazv.cz/en/home/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.