ALRABIAH, BANDER
(2016)
Analysis of loan repayments to the Agricultural Development Fund in Saudi Arabia.
PhD thesis, University of Nottingham.
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Abstract
The Agricultural Development Fund (ADF) is the Government agency responsible for financing farmers in the Saudi Arabian agricultural sector. The ADF provides short-term loans and medium-term loans and funds specialised projects, as well as providing subsidies for some types of loans. From its establishment in 1962 until 2012, the ADF has lent more than £7.7 billion and the total number of loans exceeds 439,000. However, in spite of the facilities provided by the ADF, its annual reports show that the outstanding debt increased from £579 million in 1990 to £840 million in 2012; moreover, the reports reveal that some project areas have been receiving more funding than others.
This thesis aims to assess the efficiency of the collection of loan repayments by the ADF. This aim will be achieved through four objectives: 1) analyse the current status of the regional distribution of agricultural loans to determine the optimal distribution of loans among regions to achieve development objectives, 2) examine the determinants of the efficiency of loan collection to identify and quantify factors that affect loan repayment, 3) explain the variation in collection rates among the ADF's branches and 4) provide recommendations to improve the probability of repayment and achieve the optimal distribution of loans.
Variation in the current distribution of agricultural loans among regions has been observed. Using Multiple-Attribute Analysis, this variation has been identified as sub-optimal with respect to achieving development objectives. The highest priority regions for agricultural loans are the Northern, Jazan and Baha regions.
Logistic modelling approaches have been used to determine factors affecting the repayment of short-term loans, medium-term loans and specialised projects; the empirical results of the overall model for short-term loans show that the age of the borrower and four regions have a positive significant effect on loan repayments, while the grace period, the loan value, the financial guarantee and three regions each have a significant negative effect. The results of the analysis of medium-term loans reveal that five variables have a significant effect on loan repayments: age, the grace period and loan value have a negative effect. Financial guarantee and three regions have a positive effect. The results for the specialised projects showed that the Hail region, feed and wheat project have a positive effect, while the Eastern region and greenhouses, livestock and vegetables projects have a negative effect on loan repayments, whereas the age of the borrower, the grace period, financial guarantee and loan value have no significant effect.
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