2024/04/22 by Jiayue Zhang, Ken Seng Tan, Zhang, Jiayue +5
Economics, Econometrics and Finance · #FOS: Economics and business #General Finance (q-fin.GN) #Insurance and Financial Risk Management
paper · pdf · doi:10.48550/arxiv.2404.13818
openalex publication_date 2024/04/22 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
This paper extends the application of ESG score assessment methodologies from large corporations to individual farmers' production, within the context of climate change. Our proposal involves the integration of crucial agricultural sustainability variables into conventional personal credit evaluation frameworks, culminating in the formulation of a holistic sustainable credit rating referred to as the Environmental, Social, Economics (ESE) score. This ESE score is integrated into theoretical joint liability models, to gain valuable insights into optimal group sizes and individual-ESE score relationships. Additionally, we adopt a mean-variance utility function for farmers to effectively capture the risk associated with anticipated profits. Through a set of simulation exercises, the paper investigates the implications of incorporating ESE scores into credit evaluation systems, offering a nuanced comprehension of the repercussions under various climatic conditions.