An Application of Mathematical Model for Households’ Borrowing Activities

Abstract

In rural of Vietnam, farming households have become important clients of formal financial institutions. However, currently there are only 4 out of notable 9 credit modes were applied by farmers due to the mismatch between lending requirements and households' conditions. Farmers are difficult in obtaining proper credit for their monthly cash shortage since financial institutions fix the credit amount for each household in a certain time. To amend this limitation, the research has developed a mathematical model that enable farmers calculating accurately monthly credit loan for their production activities based on cash flow at households. Empirical evidences have shown effectiveness of model in advising for borrowing and lending activities