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Risk in agriculture as impediment to rural lending: the case of North-Western Kazakhstan

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  • Petrick, Martin
  • Ditges, C. Markus

Abstract

On the basis of portfolio selection theory, this paper finds that whole-farm risk must be regarded as a major reason for the low level of credit flow to agriculture in North-western Kazakhstan. A quadratic programming model was used in order (a) to demonstrate the comparatively high overall risk exposition of a typical farm, (b) to show that an inflow of working capital could contribute to risk reduction, and (c) to illustrate short-term risk management strategies. Although there may be a role for the government in reducing risk exposition of agriculture in its current form, natural and economic constraints suggest to pave the way for structural reforms that reduce the importance of agriculture in the rural economy.

Suggested Citation

  • Petrick, Martin & Ditges, C. Markus, 2000. "Risk in agriculture as impediment to rural lending: the case of North-Western Kazakhstan," IAMO Discussion Papers 24, Leibniz Institute of Agricultural Development in Transition Economies (IAMO).
    • Handle: RePEc:zbw:iamodp:14939
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    Cited by:

    1. Lerman, Zvi, 2001. "Perspectives On Future Research In Central And Eastern European Transition Agriculture," Discussion Papers 14975, Hebrew University of Jerusalem, Department of Agricultural Economics and Management.
    2. Heidelbach, Olaf, 2007. "Efficiency of selected risk management instruments: An empirical analysis of risk reduction in Kazakhstani crop production," Studies on the Agricultural and Food Sector in Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 40, number 92323.
    3. Alexandru STRATAN, 2008. "Managing rural finance for growth and poverty alleviation in Moldova - towards an efficient European integration," Economia. Seria Management, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 11(2), pages 95-104, December.

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    More about this item

    Keywords

    Agricultural credit; Kazakhstan; Portfolio selection theory; Risk programming; Agrarkredit; Kasachstan; Portfolio selection-Theorie; Risiko-Programmierung;
    All these keywords.

    JEL classification:

    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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