Smallholder preferences and willingness-to-pay measures for microcredit

2018 ◽  
Vol 10 (3) ◽  
pp. 462-481 ◽  
Author(s):  
Zhao Ding ◽  
Awudu Abdulai
Keyword(s):  
Willingness To Pay ◽  
Interest Rates ◽  
Latent Class ◽  
Smallholder Farmers ◽  
Mixed Logit ◽  
Latent Class Models ◽  
Preference Heterogeneity ◽  
Content Type ◽  
Lower Interest Rate ◽  
Class Models

Purpose The purpose of this paper is to examine smallholders’ preferences and willingness to pay for microcredit products with varying attribute combinations, in order to contribute to the debate on the optimal design of rural microcredit. Design/methodology/approach Data used in this study are based on a discrete choice experiment from 552 randomly selected respondents. Mixed logit and latent class models are estimated to examine the choice probability and sources of preference heterogeneity. Endogenous attribute attendance models are applied to account for attribute non-attendance (ANA) phenomenon, focusing on separate non-attendance probability as well as joint non-attendance probability. Findings The results demonstrate that preference heterogeneity and ANA exist in the smallholder farmers’ microcredit choices. Averagely, smallholder farmers prefer longer credit period, smaller credit size, lower transaction costs and lower interest rate. Guarantor collateral method and installment repayment positively affect their preferences as well. Moreover, respondents are found to be willing to pay more for the attributes they consider important. The microcredit providers are able to attract new customers under the current interest rates, if the combination of attributes is appropriately adjusted. Originality/value This study contributes to the debate by assessing the preference trade-off of different microcredit attributes more comprehensively than in previous analyses, by taking preference heterogeneity and ANA into account.

Attribute Non-Attendance and Consumer Preferences for Online Food Products in Germany

2020 ◽  
Vol 69 (1) ◽  
pp. 31-48
Author(s):  
P. Christoph Richartz ◽  
Lukas Kornher ◽  
Awudu Abdulai
Keyword(s):  
Latent Class ◽  
Consumer Preferences ◽  
Mixed Logit ◽  
Meat Products ◽  
Food Product ◽  
Latent Class Models ◽  
Preference Heterogeneity ◽  
Significant Heterogeneity ◽  
Processing Strategies ◽  
Class Models

In this article, we apply a choice experiment meth-od to examine consumers’ preferences for online food product attributes, using survey data for German consumers for meat products. We use both mixed logit and latent class models to analyze preference heterogeneity and sources of heterogeneity, as well as endogenous attribute attendance models to account for consumers’ attribute processing strategies. The empirical results reveal significant heterogeneity in preferences for online meat attributes among consumers. We also find that consumers’ willingness to pay estimates are highly influenced by their attribute processing strategies.

scholarly journals SELECTION OF BREEDING STOCK BY U.S. MEAT GOAT PRODUCERS

2017 ◽  
Vol 49 (3) ◽  
pp. 416-437 ◽  
Author(s):  
NARAYAN NYAUPANE ◽  
JEFFREY GILLESPIE ◽  
KENNETH MCMILLIN ◽  
ROBERT HARRISON ◽  
ISAAC SITIENEI
Keyword(s):  
Latent Class ◽  
Mixed Logit ◽  
Nationwide Survey ◽  
Latent Class Models ◽  
Discrete Choice Experiments ◽  
Preference Heterogeneity ◽  
Breeding Stock ◽  
Meat Goat ◽  
Class Models ◽  
Selection Of

AbstractUsing nationwide survey data, we investigate U.S. meat goat producer preferences and willingness to pay for meat goat breeding stock attributes. Discrete choice experiments were employed, and mixed logit and latent class models were used for analysis. Results showed that producers preferred animals that were highly masculine/feminine, had good structure and soundness, and were of the Boer breed, whereas they preferred fewer animals that were older, of Kiko and Spanish breeds, and priced higher. Significant preference heterogeneity was found among the respondents. Larger-scale producers had greater preference for high masculinity/femininity, good structure and soundness, and Boer bucks.

scholarly journals Análisis econométrico de la heterogeneidad de las preferencias de los individuos: Aplicación a la valoración económica de la conservación del paisaje agrícola de montaña

2011 ◽  
Vol 8 (1) ◽  
pp. 103 ◽  
Author(s):  
Sergio Colombo ◽  
Nick Hanley
Keyword(s):  
Latent Class ◽  
Random Parameter ◽  
Choice Models ◽  
Latent Class Models ◽  
Preference Heterogeneity ◽  
Stated Choice ◽  
Empirical Application ◽  
Random Parameter Logit ◽  
Class Models

The need to account for respondents’ preference heterogeneity in stated choice models has motivated researchers to apply random parameter logit and latent class models. In this paper we compare these three alternative ways of incorporating preference heterogeneity in stated choice models and evaluate how the choice of model affects welfare estimates in a given empirical application. Finally, we discuss what criteria to follow to decide which approach is most appropriate.

scholarly journals Multilevel latent class modeling to segment the microfinance market

2019 ◽  
Vol 37 (5) ◽  
pp. 1103-1118
Author(s):  
Lucas Lopes Ferreira Souza ◽  
Francesca Bassi ◽  
Ana Augusta Ferreira de Freitas
Keyword(s):  
Market Segmentation ◽  
Financial Services ◽  
Latent Class ◽  
Latent Class Models ◽  
Microfinance Institutions ◽  
Content Type ◽  
Business Results ◽  
Latent Class Modeling ◽  
Class Models ◽  
Do So

Purpose Microfinance has become an important way to alleviate poverty. Though four decades have passed since its introduction, its impact is still not entirely clear. What makes it difficult to ascertain its efficacy is the existence of diverse types of microfinance organizations and client profiles. Microfinance institutions must primarily pay more attention to the client, and to the mechanism through which financial services are delivered. The purpose of this paper is to identify the profiles of microfinance customers and the features of their operations. Design/methodology/approach In this paper, multilevel latent class models were estimated to reveal clusters of operations and classes of clients. Findings The results show that there are six clusters of operations and four classes of clients in the market, each with distinct profiles and needs. Different strategies are recommended for each cluster and class. Originality/value Numerous studies have focused on the importance of getting to know the clients of microfinance programs, but none as yet have used market segmentation as a way to do so. The goal is to generate better strategies to help clients improve their business results. Applying market segmentation to the microfinance market may point to different products for different groups of clients, taking the real needs of each of them into account.

Farmers' preferences and willingness to pay for microcredit in Benin: results from in-the-field choice experiments in Benin

2020 ◽  
Vol 80 (5) ◽  
pp. 665-692 ◽  
Author(s):  
Tchekpo Fortune Ogouvide ◽  
Ygue Patrice Adegbola ◽  
Roch Cedrique Zossou ◽  
Afio Zannou ◽  
Gauthier Biaou
Keyword(s):  
Willingness To Pay ◽  
Interest Rates ◽  
Rural Areas ◽  
Financial Services ◽  
Poverty Reduction ◽  
Latent Class ◽  
Microfinance Institutions ◽  
Choice Modelling ◽  
Attribute Importance ◽  
Content Type

PurposeThis document analyses farmers' preferences and willingness to pay (CAP) for microcredit, in order to facilitate their access in rural areas.Design/methodology/approachData are based on a discrete choice experiment with 400 randomly selected farmers from 20 villages of the 7 Benin agricultural development hubs (ADHs). The preference choice modelling was performed using mixed logit (MXL) and latent class logit (LCL) models. Farmers' willingness to pay for each preferred attribute was estimated. The endogenous attribute attendance (EAA) model was also used to capture attribute non-attendance (ANA) phenomenon.FindingsThe results indicate that, on average, farmers prefer individual loans, low interest rates, in kind + cash loans, cash loans, disbursement before planting and loans with at least 10-month duration. These preferences vary according to farmers' classes. Farmers are willing to pay higher or lower interest rates depending on attribute importance. The estimate of the EAA model indicates that, when taking the ANA phenomenon into consideration, people will show stronger attitudes regarding WTP for important factors.Research limitations/implicationsBased on these results from Benin, microfinance institutions (MFIs) in developing countries can, based on the interest rates currently charged, attract more farmers as customers, reviewing the combination of the levels of the attributes associated with the nature of the loan, the type of loan (individual or collective), the disbursement period of funds, the waiting period of the loan and the loan duration. However, the study only considered production credit, ignoring equipment or investment credit.Practical implicationsThe document provides information on the key factors that can facilitate producers' access to MFI products and services.Social implicationsFacilitating small farmers' access to financial service will contribute to poverty reduction.Originality/valueThis research contributes to the knowledge of the attributes and attribute levels favoured by farmers when choosing financial products and the amounts they agree to pay for these attributes. The implementation of the results would facilitate small producers' access to financial services; thus contributing to poverty reduction.

scholarly journals Willingness to Pay for Irrigation Services in the Cold Winter Deserts of Uzbekistan

2021 ◽  
Vol 14 (1) ◽  
pp. 94
Author(s):  
Girma T. Kassie ◽  
Hasan Boboev ◽  
Ram Sharma ◽  
Akmal Akramkhanov
Keyword(s):  
Willingness To Pay ◽  
Latent Class ◽  
Smallholder Farmers ◽  
Careful Consideration ◽  
Latent Class Models ◽  
Discrete Choice Experiments ◽  
Cold Winter ◽  
Irrigation Systems ◽  
Key Characteristics ◽  
Water Scarce

Irrigation facilities in the cold winter deserts (CWDs) of Uzbekistan are very traditional and poorly managed, resulting in low water use efficiency and low productivity. Improving the irrigation facilities in these deserts is a key priority for the country. This study intended to contribute towards the development of the irrigation systems through identification and quantification of the relative implicit values smallholder farmers confer to the key characteristics of irrigation facilities. We elicited preferences with discrete choice experiments, estimated willingness to pay for these attributes using random parameters logit models, and analyzed heuristics in the choice process using a series of latent class models. Our results show that farmers have clear preferences for higher watering frequency and no interest in sharing irrigation water with downstream users. We also observed that there are distinct groups of farmers with comparable but different levels of preference. The development of irrigation facilities in the water-scarce parts of Uzbekistan would benefit from careful consideration of the preferences of the target communities and targeting of the schemes based on the broad heterogeneities within the communities. This will aid in the maintenance of irrigation systems and, as a result, increase agricultural production and productivity.

scholarly journals Is Biodiversity a Relevant Attribute for Assessing Natural Parks? Evidence from Cornalvo Natural Park in Spain

Forests ◽  
2020 ◽  
Vol 11 (4) ◽  
pp. 410 ◽  
Author(s):  
Eva Crespo-Cebada ◽  
Carlos Díaz-Caro ◽  
Rafael Robina-Ramírez ◽  
M. Isabel Sánchez-Hernández
Keyword(s):  
Willingness To Pay ◽  
Latent Class ◽  
Economic Valuation ◽  
Mixed Logit ◽  
Preference Heterogeneity ◽  
Natural Park ◽  
Natural Parks ◽  
High Preference ◽  
Relevant Attribute ◽  
Visitor Preferences

The economic valuation of goods that do not have a market, like services offered by natural parks, provide a lot of information for the purpose of policy making on the conservation and protection of the natural environment, as well as for establishing park use strategies for potential park visitors. In this respect, this paper aims to analyse visitor preferences for Cornalvo Natural Park, which has been classed, since 1992, as a Site of Community Importance. To do this, we conducted an analysis adopting the choice experiment methodology to determine visitor preferences for a set of attributes. Additionally, we included a visitor preference heterogeneity analysis based on a mixed logit model in order to calculate individual willingness to pay with respect to a set of previously specified attributes. Finally, we also implemented the latent class methodology to define groups of individuals with similar characteristics. The information was gathered from visitor surveys conducted during 2019. The main results show that tourists had a high preference and willingness to pay for higher biodiversity levels and lower numbers of visitors, whereas the other attributes were less relevant. Additionally, we detected some degree of heterogeneity in willingness to pay by sex, age and income. Finally, Latent class analysis identified two visitor classes, determined primarily by age and income.

Some New Methods for an Old Problem: Modeling Preference Changes and Competitive Market Structures in Pretest Market Data

1997 ◽  
Vol 34 (1) ◽  
pp. 130-142 ◽  
Author(s):  
Ulf Böckenholt ◽  
William R. Dillon
Keyword(s):  
Latent Class ◽  
New Product ◽  
Latent Class Models ◽  
Preference Heterogeneity ◽  
Time Varying ◽  
Modeling Framework ◽  
Market Structures ◽  
Before And After ◽  
Class Models ◽  
Choice Probabilities

Despite the enormous amounts of resources devoted to concept and product testing and the continued use of pretest market (PTM) modeling procedures, estimates of new product failures are still alarmingly high. The primary objectives of PTM modeling are to forecast the market share/sales volume of a new product and to determine the sources of new product share at the aggregate market level. The authors describe a new approach that is designed to provide a parsimonious description of competitive changes before and after a new product is introduced by identifying latent segments (i.e., groups of consumers) that vary in size and composition with respect to the relative preferences for a set of brands before and after a new product is introduced. Each latent segment represents a particular preference state characterized by a set of segment-level choice probabilities. The modeling framework is based on a class of dynamic latent class models that explicitly recognize two major types of preference heterogeneity: (1) heterogeneity caused by before-after changes in latent preferences for the brands (i.e., time-varying relative choice probabilities) and/or (2) heterogeneity caused by consumers changing their latent preference segment in response to a new product (i.e., time varying latent segment probabilities). As is demonstrated in the empirical application, the dynamic latent class models provide a comprehensive framework for understanding how a new product changes the competitive landscape.

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