Mochalova L.A.Financial University under Government of Russian Federation, Barnaul Branch, Barnaul, Altai Krai, Russian Federation Mochalova-L@yandex.ru
Importance Banks consider a pledge provided to secure a credit transaction as a guarantee of loan repayment. In the agricultural sector, future yield is one of pledged items. Methods to appraise it require further improvements. The scope of this study is the methodological tools of pledge of future yield's appraisal and directions of its improvement. Objectives The purpose of our research is to develop methodological tools to appraise collateral in the form of future crop. Methods Using econometric methods, we analyzed current approaches to the appraisal of future crop provided to secure a loan, and developed the areas of their improvement, based on probabilistic methods. Results The study reveals specific features of pledged future yield based on the specifics of agriculture. We present methodological tools to appraise pledged assets that include a new element, i.e. the methodological approach, which rests on the risk of climate conditions and grain market situation. The technique to evaluate the haircut for future yield is determined under the cumulative method based on risk factors. Conclusions and Relevance The presented methodological tools are of great importance in banking practice. They enable to reduce the influence of human factors on future value of pledged assets and, consequently, mitigate credit risk, especially the default risk.
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