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The Demand for Loans for Major Rice in the Upper North of Thailand

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  • Wiboonpongse, Aree
  • Sriboonchitta, Songsak
  • Chaovanapoonphol, Yaovarate

Abstract

Though Thailand is the largest rice exporting country, its yield is relatively low. This might be a result of the under use of purchased input factors. Amongst other factors, high input prices and capital constraints could be some reasons. The latter could be removed by loans providing favorable market conditions exist. This paper seeks to investigate factors affecting the decision to borrow, and the demand for loans, for rice. The Tobit type-II models are estimated using the survey data collected from 656 rice farmers in the Upper North of Thailand in 2004. It is found that significant factors affecting the decision of borrowing include; the land planted to rice, dummy variable for off-farm income sources, and annual interest rates. In the second step, the farmers who borrowed from the rural financial sources, including 202 and 250 farmers from Chiang Mai and Chiang Rai respectively, are considered. According to the OLS estimation, only the land planted to rice has a positive significant effect on the amount of loans for major rice. Further, the interest rate affects the probability of loans but has no impact on the amount of loans, for rice.

Suggested Citation

  • Wiboonpongse, Aree & Sriboonchitta, Songsak & Chaovanapoonphol, Yaovarate, 2006. "The Demand for Loans for Major Rice in the Upper North of Thailand," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25303, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae06:25303
    DOI: 10.22004/ag.econ.25303
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    References listed on IDEAS

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    1. Heij, Christiaan & de Boer, Paul & Franses, Philip Hans & Kloek, Teun & van Dijk, Herman K., 2004. "Econometric Methods with Applications in Business and Economics," OUP Catalogue, Oxford University Press, number 9780199268016.
    2. Sarmistha Pal, 2002. "Household sectoral choice and effective demand for rural credit in India," Applied Economics, Taylor & Francis Journals, vol. 34(14), pages 1743-1755.
    3. J. Manrique & K. Ojah, 2004. "Credits and non-interest rate determinants of loan demand: a Spanish case study," Applied Economics, Taylor & Francis Journals, vol. 36(8), pages 781-791.
    4. Elhiraika, A.B. & Ahmed, S.A., 1998. "Agricultural Credit Under Economic Liberalization and Islamization in Sudan," Papers 79, African Economic Research Consortium.
    5. Kochar, Anjini, 1997. "An empirical investigation of rationing constraints in rural credit markets in India," Journal of Development Economics, Elsevier, vol. 53(2), pages 339-371, August.
    6. Amemiya, Takeshi, 1984. "Tobit models: A survey," Journal of Econometrics, Elsevier, vol. 24(1-2), pages 3-61.
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    Cited by:

    1. Olomola, Aderbigbe, 2014. "Business operations of agrodealers and their participation in the loan market in Nigeria:," IFPRI discussion papers 1400, International Food Policy Research Institute (IFPRI).
    2. Olomola, Aderbigbe & Gyimah-Brempong, Kwabena, 2014. "Loan demand and rationing among small-scale farmers in Nigeria:," IFPRI discussion papers 1403, International Food Policy Research Institute (IFPRI).
    3. Olomola, Aderibigbe S., 2014. "Determinants of Agro-Dealers’ Participation in the Loan Market in Nigeria," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 17(3), pages 1-20, September.

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