Net Income Allocation in Credit Cooperatives: A Stochastic Multiperiod Simulation Analysis of the Farm Credit System

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.

Name thesis:degree_name

Ph.D.

Level thesis:degree_level

Dissertation

Discipline thesis:degree_discipline

Agricultural Economics

Grantor

University of Illinois at Urbana-Champaign

Year dc:date

2015

Author dc:creator

• Requejo, Luis Manfredini Hernandez

Contributors dc:contributor

• Sherrick, Bruce J.

• Economics, General

Language dc:language

eng

Identifier

(MiAaPQ)AAI9921724

OAI identifier oai:identifier

oai:www.ideals.illinois.edu:2142/83031