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Credit Scoring System for Managing Risk in Agricultural Loan Portfolio of the Thai Rural Financial Market |
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| รหัสดีโอไอ | |
| Creator | Songkran Somboon |
| Title | Credit Scoring System for Managing Risk in Agricultural Loan Portfolio of the Thai Rural Financial Market |
| Publisher | Center for Applied Economics Research (CAER), Faculty of Economics, Kasetsart University |
| Publication Year | 2558 |
| Journal Title | Applied Economics Journal |
| Journal Vol. | 22 |
| Journal No. | 1 |
| Page no. | p:27-50 |
| Keyword | logit model, credit risk management,credit scoring,optimal returns, agriculturalloan portfolio |
| ISSN | 0858-9292 |
| Abstract | The main objective of this study is to develop a credit risk management instrument of theBank for Agriculture and Agricultural Cooperatives, an important organization of the Thairural financial market. The paper highlights the application of the credit scoring system inmanaging risk in agricultural lending activities. The logit model is first developed to identifythe probability of default from the economical and geographical risk factors. The resultsverify the payment history, collateral types, loan to value ratio, deficit irrigation, saving, landsuitability, natural disasters (flood and drought) and income to expense ratio in thehousehold are important factors in determining of the probability of default in the farmerslending. The model is tested for reliability and validity of the prediction power in discriminatingthe debtors. Results from the logit model are subsequently employed to formulate thecredit scoring system and internal credit risk rating system with reference to the Basel IIcriteria. The results show how agricultural exposures can be managed on a portfolio basiswhich will enable the bank to diversify the risk in each of portfolio share, determine theinterest rate on the basis of risk, and analyze for the minimum capital requirements andoptimal returns in agricultural loan portfolio. |
