Weathering the Storm: The Impact of the East Asian Crisis on Farm Households in Indonesia and Thailand

This article assesses the impact of the East Asian financialcrisis on farm households in two of the region's most affectedcountries. Indonesia and Thailand, using detailed household-levelsurvey data collected before and after the crisis began. Althoughthe nature of the shocks in the two countries were similar,the impact on farmers' income (particularly on distribution)was quite different. In Thailand, poor farmers bore the bruntof the crisis, in part because of their greater reliance onthe urban economy, than did poor farmers in Indonesia. Urban-rurallinks are much weaker in Indonesia. Farmers in both countries,particularly those specializing in export crops, benefited fromthe currency devaluation. Although there is some evidence thatthe productivity of the smallest landholders declined over theperiod in question, it is difficult to attribute this directlyto the financial crisis. At least in Thailand, a rural creditcrunch does not seem to have materialized.      

THE ROLE OF GROUPS AND CREDIT COOPERATIVES IN RURAL LENDING

Lending groups and credit cooperatives have the potential toprovide affordable credit to small-scale farmers because theycan reduce transaction costs and lower the risk of default.In developing countries these two kinds of lending arrangementshave a mixed record, although their difficulties reflect shortcomingsin implementation rather than in the lending arrangements themselves. The article indicates that successful group lending schemeswork well with groups that are homogeneous and jointly liablefor defaults. The practice of denying credit to all group membersin case of default is the most effective and least costly wayof enforcing joint liability. Another way to encourage membersto repay is to require mandatory deposits that are reimbursedonly when all borrowers repay their loans. The article points out that credit cooperatives that mobilizesavings deposits are less dependent on external sources andincrease the borrowers' incentive to repay. The success of creditcooperatives requires training of members as well as management.Experience suggests that credit cooperatives should not expandtheir activities beyond financial intermediation until theydevelop strong institutional and managerial capabilities      

The Role of Perceived Organizational Performance in Organizational Identification,Adjustment and Job Performance*

abstract Favourable organizational status and prestige has a substantial role in shaping constituents' attitudes and actions. The status and prestige of an organization is often a reflection of its achievements or performance. In the present study, we investigate the role of organizational performance or achievement (as assessed by organizational members) in evoking employees' identification, adjustment, and job performance. The results of this study indicate that two forms of organizational performance (labelled as perceived social responsibility and development and perceived market and financial performance) are associated with organizational identification. However, when compared to perceived market and financial performance, perceived social responsibility and development had a larger effect on organizational identification, which in turn resulted in enhanced employees' work outcomes – adjustment and job performance.     

Collateral,Guaranties and Rural Credit in Developing Countries: Evidence from Asia

The paper reviews the theory of the impact of loan collateral, and in particular land collateral, in institutional and non-institutional rural credit markets. Evidence from three Asian developing countries is presented, showing extensive use of land collateral among institutional lenders in countries where such collateral is legal. The use of land collateral is more common than other forms of security, except in places where legal inhibitions on mortgaging agricultural land exist. Non-institutional lenders are less inclined to use land collateral. However, lenders who do not have links to borrowers in matters other than finance are more likely to use loan securities. Estimates of instutional credit supply and demand in rural Thailand confirm that the pledging of land collateral affects the supply of credit more than group guaranty. It is also shown that larger farmers are more likely to utilize land collateral. The conclusion is that land collateral is preferred by instutional lenders as it reduces creditworthiness assessment costs. Attempts to ban or limit collateral use by decree are motivated by equity considerations, but they will cause loss of efficiency. Simplification of ownership verification and other policies reducing the transaction cost of collateral pledging will mitigate the negative equity implications of collateral.