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Loan Repayment Performance of Public Agricultural Credit Agencies: Evidence from Jordan

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  • Ali AL-Sharafat
  • Tala Qtaishat
  • Mohammed Majdalawi

Abstract

The agricultural production process in many developing countries has been negatively impacted by poor loan repayment. Most of public credit agencies in such countries suffer from this critical problem. This study aimed at evaluating the loan-repayment performance of public agricultural credit agencies. The Agricultural Credit Cooperation (ACC) in Jordan was chosen to be investigated. To achieve its goals, the study delved into the determinants of loan-repayment performance among ACC borrowers. Data from ACC sources for the period of Financial Year 1960 to Financial Year 2011 (52 years) were analyzed. Simple descriptive statistics tests and regression techniques were conducted. Factors related to the accessibility of farmers to credits, to the collection performance of ACC, and to the administration performance of ACC were included in the analysis. The results of the study revealed that the repayment rate of the investigated public credit agency (ACC) was 0.92, indicating a high level of repayment performance and a low default rate (0.08). The positive effects of the volume of loans borrowed, volume of loans repaid number of borrowers, number of credit agency staff, and borrower experience were the most important factors related to this result. Sufficient and strict controls as well as monitoring are required. Outreach to beneficiaries should be improved to enhance repayment performance. To avoid the burden of provisioning on agricultural credit agencies, legal actions and guarantees should be taken against loans defaulters. Introducing a reward system for those individuals who pay on time will be helpful in enhancing repayment performance.

Suggested Citation

  • Ali AL-Sharafat & Tala Qtaishat & Mohammed Majdalawi, 2013. "Loan Repayment Performance of Public Agricultural Credit Agencies: Evidence from Jordan," Journal of Agricultural Science, Canadian Center of Science and Education, vol. 5(6), pages 221-221, May.
    • Handle: RePEc:ibn:jasjnl:v:5:y:2013:i:6:p:221
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    References listed on IDEAS

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    1. Adams, Dale W. & Graham, Douglas H., 1981. "A critique of traditional agricultural credit projects and policies," Journal of Development Economics, Elsevier, vol. 8(3), pages 347-366, June.
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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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