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Driving force or obstruction? the impacts of financial supervision and structural changes on the productivity of the credit departments of farmers’ associations

Yung‐Hsiang Lu ( National Chiaya University Chiayi City Taiwan )

China Agricultural Economic Review

ISSN: 1756-137X

Article publication date: 18 March 2016

233

Abstract

Purpose

In Taiwan, owing to the defects of the management system, the percentage of non-performing loans of the Credit Departments of Farmers’ Associations (CDFAs) has increased markedly. The government has thus imposed a series of financial reforms on them over the years. It is necessary to examine the influence of public policies on the CDFAs’ performance and check if they are a driving force or obstruction?

Design/methodology/approach

This study uses the generalized meta-frontier Malmquist productivity index framework to estimate the productivity dynamics for various types of CDFAs during 2000-2009. Moreover, the proposition of whether financial supervision and structural change played the role of driving force or obstruction on productivity changes of CDFAs is also examined.

Findings

The empirical results show that the productivity of CDFAs decreased year on year despite the policies. The sources resulting in the decline were mainly from technical change and technical efficiency. Meanwhile, the productivity performance of urban Farmers’ Associations was the best, followed by that of rural and hybrid ones. As for the determinants, it was found that small financial reforms and the financial tsunami caused a decrease in the productivity of CDFAs. Furthermore, increasing the number of competitive financial institutions, expanding the scale of the arable lands of peasant households, increasing the proportion of dry lands, decreasing the area of fallow lands and increasing the ratio of peasant households helped increase the productivity of CDFAs.

Originality/value

This study uses the generalized Meta-frontier Malmquist Productivity Index model to observe productivity dynamics in order to analyze changes in the productivity of different types of CDFAs

Citation

Lu, Y. (2016), "Driving force or obstruction? the impacts of financial supervision and structural changes on the productivity of the credit departments of farmers’ associations", China Agricultural Economic Review, Vol. 8 No. 2. https://doi.org/10.1108/CAER-09-2014-0098

Publisher

:

Emerald Group Publishing Limited

Copyright © 2016, Emerald Group Publishing Limited

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