Abstract:

The problem of agricultural credit cooperative' arrears on the
and utilized for productive purposes and that although small farmers are
capable of saving, few are creditworthy.
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formal lenders as they do not meet the creditworthiness criteria and
also because of high borrowing costs. A compromise situation is to disburse
group loans.
lenders and small farmers.
channelling credit to farmers.
model of effiof
loan principal P, the number of shares, the interest margin (
I?
t = 0.05 P 4- P ( c) - C - D - - - - (1)
Cleu.ly, the volume of credit demanded by individual members influences
the growth of their societies' networth.
a
model.
From equation (1) above, it was hypothesised that efficiency in societies
is influenced by the participation of members (L), the training and experience
of secretaries (M), the level of agricultural activity in the envi-
4 t-3 t-3 (2)
1 2' 3 4 t 6 t-4
(3)
S + ccY
4 5 t-4 (4)
group lending is an innovation favourabJe to both
Credit cooperatives are used as conduits for
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i
three models were specified viz]
¦ -Y^ , ,
the operating costs (C) and arrears as follows:-
A Yt- = n.ns p 4- p - 1
These are:-
+ a L + a_H + a_A + a.S
A theoretical framework was formulated including a
+ C6Xt
+ M. 7 t +
+ °9Xt-2
a0
bof
Wl
AYt - ¦vr + ut
economy,
xt-l,
rons of the cooperative, the assets of societies (S), lagged networth
y
four periods ( t-4), the economic trend (T) of performance of the
X. , , , ,
1“ ' “2“ ' “3 ' ’ ”
= b.L b„M + boA + b,S
+ b10Xt-3
loans obtained in current period ( t) and the last three periods
t-2 and t-3.
Yt-3.
Yt .
ciency of operation of agricultural credit cooperatives in Trinidad.
Y
The model states that growth in networth (A t) dcrends on the volume
i is
m - c),
In order to evaluate the performance of cooperatives in Trinidad,
Y
a lagged networth (t-3) model,
Y
current networth ( t) model and a rate of growth, of networth (A. t )
cq + + c^M +
+ a T + U
+ b.T + b,Y
b r
C3^ + C
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In the second stage of the study, data sources were identified,
time-series, cross-sectional and other data collected.
que of regression was chosen for estimating the above models so as to
evaluate the efficiency of societies.
In the next phase, the results of the surveys were analysed and the
models were evaluated for statistical significance, goodness of fit,
overall significance, auto-correlation and multi-collinearity using the
first o.der and second order tests at the 10 percent level cf significance.
All the explanatory variables in the lagged networth model were
statistically significant implying that they all influence efficiency.
Together they explained 71.67 percent of the total variation in networth.
Seven out of ten variables in the current networth model are statistically
These are participation,
ables They explained 95.75 percent of the total
variation in current networth. In the growth model, three variables
namely: current loan, assets and lagged networth (four years) were
statistically significant explaining 30 percent of the total variation
in the rate cf growth. i
by all the explanatory variables except loan variable However the
participation of members, the training-and experience of secretaries and
the economic trend of the economy are very important variables by virtue
of their large co-efficients of 2222 and 941 for- participation, 3692 for i
training and 517 and 297 for economic trend in the lagged networth and
current networth models respectively.
i ¦’
i t
questionaires prepared, samples of members and secretaries selected and
The OLS techni-
The above results indicate that efficiency of societies is influenced
Xt-4.
significant and therefore influence efficiency.
assets, economic trend, lagged networth (four years ago) and loan vari-
X. -L , , X_ „
t, t-1 and t-2.
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The overall regressions are significant with F values of 381 for the
current networth model, 86 for the lagged networth model and 12 for the
growth model.
Positive auto-correlation was detected in the lagged networth arid
respectively and 2.41 in the growth model which was inconclusive. There
cated by very small partial correlation co-efficients.
From the results of the survey, the following observations were
made. The efficiency of societies is influenced by the low participation
of members as displayed through default. Wilful default was the more
important source of poor discipline as opposed to lack of real ability
to pay. It arose cut of members' attitude to tiie ADB funds and was
aggravated by apathetic management.
Results indicate that the inefficiency of societies displayed
through growing arrears increased ADB costs of lending so much so that
about 25 percent of the ADB loans had not been recovered. This explains
the decapitalization of ADB and the inability to continue lending in
1933. Societies cannot mobilise savings to supplement ADB loans and
networth as commercial banks have effectively done so. Therefore developto
ensure sustained growth under prevailing circumstances. In the fourth
fulness for policy-formulation.
is influenced by participation
It was concluded that the efficiency of operation of societies which
also influences the operation of the ADB
stage of tiie study the results were evaluated for reliability and use—
was no perfect multi-collirearity between explanatory variables as indi—
ing a good credit rating with the ADB by being efficient is fhe best way
current networth models with Durbin Watson statistic of 0.9 and 1.47
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of members, training of secretary, activity, assets of societies, economic
trend are the most important.
It was recommended that to enhance the efficiency of societies,
that the active participation of members be stimulated through an education
programme, the management (secretary and board members) be trained
and rotated and motivated, that societies be vertically integrated to
inspire confidence and for solidarity and that the staff of the Department
of Cooperative Development be allowed to use their discretion to
recover arrears.