Journal of Rural Development
An Analysis on Cost Efficiency for Agricultural Cooperatives in Korea and Its Determinants
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AuthorPark, Changsuh
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Publication Date2015.12.21
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Original
This study empirically estimated the cost efficiency of 145 agricultural cooperatives in Seoul and Gyeonggi-do in Korea during the period of 2007~2013 using the method of stochastic frontier analysis. Furthermore, the determinants of cost inefficiency have been estimated using firm-specific characteristics. According to the results, the cost efficiency of the sample has been improved from 0.845 in 2007 to 0.907 in 2013. The three types, rural, small-and-medium city, and large city areas, showed different trends of cost efficiency: the type of large city has the highest cost efficiency, and that of small-and-medium city was the lowest. In the determinants of cost inefficiency, the larger the size of agricultural cooperatives, the lower cost inefficiency. However, the loan default rate has a negative effect on cost inefficiency. The cooperatives with security investment rather than those without security investment also improved cost efficiency.
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