Developing a Program to Assess the Ability to Repay Debts and Determine Loan Interest Rates According to the Quality of Members’ Credit of Phrom Buri Agricultural Cooperative Limited

Abstract

The objectives of this research were to 1) create a system to assess debt repayment capability and a system for determining the loan interest rate structure based on the credit quality of the cooperative, 2) measure the debt repayment ability and analyze the impacts that will occur on the cooperative and cooperative members participating in the project to defer debt repayment and 3) develop a ready-made program to assess the debt repayment capability and determine loan interest rates according to the quality of credit of members of  Phrom Buri Agricultural Cooperative Limited.

The research population was 113 members of Phrom Buri Agricultural Cooperative Limited who participated in the 2023 debt repayment deferment project. The data were collected from the entire population. The secondary data were collected from the credit department and geographic databases. The economic method was used to create logit model in order to develop into the debt repayment capability assessment system, loan interest rate structure determination system and software programs from Microsoft Excel.

The results of the research revealed that the debt repayment capability assessment system and a system for determining the structure of loan interest rates based on loan quality classified debt repayment capability into 5 levels: 1(A), 2(B), 3(C), 4(D) and 5(F). It expected that out of 113 cooperative members participating in the payment deferment project, 108 cases (or 95.57%) will be able to repay the debts., , and 5 cases (4.43%) is unable to repay their debts, and the loan interest rate structure is 6.00%, 6.50%, 7.00%, 7.50%, and 8.00%, respectively.In addition, the results revealed that the system for determining the loan interest rate structure based on credit quality provided the cooperative with the ability to better generate income and make profits from loans than the current system that determined interest rates based on the original structure. Also, through the new system, the members of the cooperative received fair interest rates on loans which was consistent with the credit quality and risk. Additionally, the software program for debt repayment capability assessment and loan interest rate determination based on the credit quality of the cooperative members was developed from a ready-made spreadsheet program by linking data with Microsoft Excel. It consisted of 3 parts: data import section, data processing section and results display section. The information shown included (1) the credit score received, (2) the probability of defaulting the loan, (3) the chance of debt repayment, (4) the debtor’s class, (5) debt repayment capability and (6) yearly loan interest rate. The program can be applied to evaluate other cooperative members besides those participating in the debt repayment deferment project.