A study on Efficiency of Credit and Supply Departments of Farmer's Associations-An Application of DEA
Date Issued
2010
Date
2010
Author(s)
Chang, Thong-Yung
Abstract
Farmer Association is the most organized, with the longest history, which has been found for nearly 100 years, and the biggest organization of juristic person in Taiwan. It consists of farmers and non-farmers, and divided by administrative area. Purposes of farmer association are to protect the farmers’ right, enhance the knowledge and skills, increase the production profits, improve the living standard of farmers, prosper the economy of farm village, and promote the modernization of agriculture.
The number of commercial bank was sharply increased due to the financial openness from 1991. 16 new banks were found, and many credit cooperatives, trust companies were transformed into commercial banks. The competition of financial industry in Taiwan is intensified, and merger becomes a way to enhance the competitiveness of financial institutions. The strong competition also forced the commercial banks to participate in the local financial services with their abundant resources, various financial instruments and efficient management methods, and therefore endangered the local credit cooperatives.
In 2000, The Financial Institutions Merger Act was passed to promote the merger of financial institutions and enhance the operation of agricultural financial institutions. The act reduced the tax, extended time limits of preferential policies for the merger institutions, and relaxed the regulations for merger. Moreover, the act gave the right to the Ministry of Finance to takeover the credit department of farmer association with massive deficit. Although the rules has established, the adequacy of the merger between farmer associations still depends on whether the merged association can make use of the scale economy by merger. Therefore, the operational efficiency needs to be evaluated.
The CCR and BCC model were used in this study to assess the operational performance of the famer association as a whole, which includes the credit and supply department. We used the CCR model in the first stage of DEA to estimate the technical and allocative efficiency with CRS assumption. In the second stage, we used the BCC model with varied return-to-scale to estimate the pure technical efficiency, and calculated the scale efficiency by the technical efficiency estimated in the first stage. The estimated results were used to compare the operation efficiency of the merged farmer association with the efficiency of the farmer associations before merger.
Subjects
Farmer association
Effiiency analysis
Technical efficiency
Scale efficiency
Data envelopment analysis,DEA.
Type
thesis
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