Net Income Allocation in Credit Cooperatives: A Stochastic Multiperiod Simulation Analysis of the Farm Credit System
Requejo, Luis Manfredini Hernandez
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https://hdl.handle.net/2142/83031
Description
Title
Net Income Allocation in Credit Cooperatives: A Stochastic Multiperiod Simulation Analysis of the Farm Credit System
Author(s)
Requejo, Luis Manfredini Hernandez
Issue Date
1999
Doctoral Committee Chair(s)
Sherrick, Bruce J.
Department of Study
Agricultural Economics
Discipline
Agricultural Economics
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
Economics, General
Language
eng
Abstract
The present study addresses the contested allocation policies of agricultural credit cooperatives. It is hypothesized that the objective of credit cooperatives is affected by the power structure of its participants, which in turn determines what allocation policy is adopted. A stochastic, multi-period simulation approach is used to analyze the sustainability and impact of various forms of net income allocation practices on a cooperative's capital structure, financial performance, and members' benefits from cooperative use. Simulation results indicate that depending on the level of cooperative capital, gains from allocation accrue for members while the increase in the risks associated with the reduction in the levels of cooperative capital are minimal for small proportions of net income allocated. The optimal allocation policy, however, is difficult to determine because it depends on the existing combination of forces among the cooperative participants, and the present and future conditions of the agricultural economy.
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