| dc.description.abstract | Farmer access and financial performance are used as
criteria to evaluate major farm credit schemes and lenders
within the formal sector in Kenya. A non-mathematical model
is constructed to demonstrate the interaction of political
and financial factors in determining the performance of the
farm credit system according to these criteria. The model
identifies why and how major government initiatives in farm
credit provision so frequently have been disappointing by
either or both of these criteria. The questions of access
to credit, the relevance of credit to on-farm innovation,
and the ability of credit to stimulate agricultural production
are also related through the model.
The performance of the system is viewed from the perspective
of financial repression and its effect on the
development of financial structure. The hypotheses explored
in the study demonstrate the applicability of elementary
capital market and financial theory to Kenya's agricultural
credit system. The model derived from these hypotheses
highlights the constraints to financial development, in terms
of farmer access and the financial viability of agricultural
loan portfolios, imposed by the peculiar set of assumptions
upon which government intervention in credit provision,
often with the support of external donors, is based.
,The model is derived largely from the malfunctioning of
major elements in Kenya's farm credit system, whLch has been
the most visible fact of theoretical and operational interest.
However, its validity is confirmed by the explanatory power
of the framework it offers for the analysis of the outstanding
success of the cooperative structure in rural financial intermediation
in the early 1970's.
The Repayment Index, which makes its debut in this
study, is applied in two concluding exercises as a social
science research tool and as a credit management tool.
Borrowers' repayment performance may be precisely quantified
and ranked in terms of Repayment Index values. Rigorous
statistical treatment of repayment performance, including
correlation with borrower, farm and loan characteristics,
is possible using Repayment Index values. These values also
furnish a basis for loan administration decisions and for the
comparison of the performance of loan portfolios, credit
decisions and decision makers, and of other managerial
variables within the lender's control. | en |
