Is Investing in a “Land Cott” Beneficial? An Inquiry into Interest Rate Swap
DOI:
https://doi.org/10.69728/jst.v11.96Abstract
“Land Cott" refers to the exchange of cash for the right to use arable land with the understanding that the land owner will redeem this right after repayment is finished. The study's main goal is to find out whether investing by taking “land cott” is profitable or not by effectively applying “interest rate swap”, and also to find out the determinants of investing in “land cott”. Some financial tools and techniques such as “interest rate swap” and “time value of money” have been applied to calculate the benefit of investing in “land cott” along with a logistic regression model as well as some descriptive statistics. The study found that investing by taking “land cott” is more profitable than keeping money as a deposit in banking. The majority of the farmers are willing to invest by taking “land cott” as there are fewer formalities than other investments. However, the investors are investing in this sector without considering its potential risk. Therefore, by the findings of the study, the investors will get a guideline to incorporate risk with their earnings along with the application of interest rate swaps in the agricultural sector which is the major contribution of this study. In this regard, the government should take proper initiatives to convert the investment in “land cott” into a formal investment to accelerate the mechanism of land.
References
Adams, M. (2020). Alternative Lending in Rural Economies: The Case of Informal Land Mortgages. Journal of Development Finance, 12(3), 45-62.
Alauddin, M., & Biswas, J. (2014). Agricultural credit in Bangladesh: trends, patterns, problems and growth impacts. The Jahangirnagar Economic Review, 25(14), 125-138.
Alzghoul, A., Alsheikh, G. A. A., & Yamin, I. (2023). The relationship between savings and investment: evidence from Jordan. International Journal of Professional Business Review: Int. J. Prof. Bus. Rev., 8(3), 3.
Barry, Peter J., Paul N. Ellinger, John A. Hopkin, and C. B. Baker (1995) Financial Management in Agriculture. Illinois: Interstate Publishers, Inc.
Besley, T. (1995). "Savings, Credit and Insurance." Handbook of Development Economics.
Broll, U., P. Welzel and K.P. Wong, 2013. Price risk and risk management in agriculture. Contemporary Economics, 7(2): 17-20. Available at: https://doi.org/10.5709/ce.1897-9254.79.
Byerlee, D. and K. Deininger, 2013. Growing resource scarcity and global farmland investment. Annual Review of Resource Economics, 5(1): 13-34. Available at: https://doi.org/10.1146/annurev-resource-091912-151849.
Cell, C.C., 2009. Crop insurance as a risk management strategy in Bangladesh. Department of Environment. Ministry of Environment and Forests. Government of the People’s Republic of Bangladesh, Dhaka.
Das, Sanjiv. 1995. “Credit Risk Derivatives,” Journal of Derivatives, Spring, pp. 7-23.
Decardi-Nelson, I., Asamoah, O. R., Solomon-Ayeh, B., & Nduro, K. A. (2012). The informal sector and mortgage financing in Ghana. Ghana Journal of Development Studies, 9(2), 136-152.
De Soto, H. (2000). The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else.
Durand-Lasserve, A., & Royston, L. (2012). Holding Their Ground: Secure Land Tenure for the Urban Poor in Developing Countries.
Finance Division, Bangladesh Economic Review 2021 (Dhaka: Ministry of Finance, Government of the People Republic of Bangladesh, 2017): 13.
Finance Division, Bangladesh Economic Review 2021, (Dhaka: Ministry of Finance, Government of the People Republic of Bangladesh, 2017): 17.
French, L. and E. Silver, 2007. Crop insurance to mitigate loss from flooding in Bangladesh-A viability assessment. MSc Environment and Resource Management Module VI – Traineeship: 1-84.
th Five Year Plan, (2020), General Economics Division (GED), Bangladesh Planning Commission: 3, 7, 11, 12.
GAO (1994) Financial Derivatives: Actions Needed to Protect the Financial System.
Gastineau, G. L., & Smith, D. J. (2001). Risk Management, Derivatives, and Financial Analysis. The Research Foundation of AIMR.
Gërxhani, K., & Van de Werfhorst, H. G. (2013). The effect of education on informal sector participation in a post-communist country. European Sociological Review, 29(3), 464-476.
Gupta, M. R., & Chaudhuri, S. (1997). Formal credit, corruption and the informal credit market in agriculture: A theoretical analysis. Economica, 64(254), 331-343.
Hossain, M. M. (2010). Changing consumption patterns in rural Bangladesh. International Journal of Consumer Studies, 34(3), 349-356.
Jones, R. (2021). Financial Inclusion and the Role of Informal Lending. Global Economic Review, 9(1), 67-82.
Jones, T.L., 2007. Agricultural applications of weather derivatives. International Business and Economics Research Journal, 6(6): 53-60. Available at: https://doi.org/10.19030/iber.v6i6.3377.
Khan, S., M. Rennie and S. Charlebois, 2013. Weather risk management by saskatchewan agriculture producers. Agricultural Finance Review, 73(1): 161-178. Available at: https://doi.org/10.1108/00021461311321375.
Khatun, F., 2012. Proposals for agriculture sector. Forum, A monthly Publication of The Daily Star, 6(6).
Kolb, Robert W (1993) Financial Derivatives. Miami: Kolb Publishing Company.
Marshall, John F.(1990/91) Futures Versus Swaps: Some considerations for the Thrift Industry, Review of Business. Winter 1990/91.
Miah, M. A. Kabir, Alam, A.K.M. Ashraful and Rahman, A.H.M.A. 2006. Impact of Agricultural Credit on MV Boro Rice Cultivation in Bangladesh. Journal of Agriculture and Rural Development 4(1&2), 161-168.
Mishra, A.K., A. Kumar, P.K. Joshi and A. D'Souza, 2018. Impact of contract farming on yield, costs and profitability in lowvalue crop: Evidence from a low-income country. Australian Journal of Agricultural and Resource Economics, 62(4): 589-607. Available at: https://doi.org/10.1111/1467-8489.12268.
Murshid, K. A. S. (1992). Informal credit markets in Bangladesh agriculture: Bane or boon? (No. 996-2016-77892).
North, D. C. (1990). Institutions, Institutional Change and Economic Performance. Cambridge University Press.
Obamuyi, T. M. (2013). Factors influencing investment decisions in capital market: A study of individual investors in Nigeria. Organizations and markets in emerging economies, 4(07), 141-161.
Pau, S. C., & Saha, A. K. (2017). Literacy rate and primary education-A study on 64 districts of Bangladesh. The Bangladesh Accountant.
Paul, A., R. Heifner and J. Helmuth, 1976. Farmer's use of forward and futures markets. Washington, DC: US Department of Agriculture, National Economics Analysis Division. Economic Research Service Agriculture Economics Report. pp: 320.
Paul, J., 2013. A study on the feasibility of weather derivatives in India. PARIPEX-Indian Journal of Research, 2(1): 14-15.
Payne, G. (2001). Urban Land Tenure Policy Options: Titles or Rights? Habitat International, 25(3), 415-429.
Pederson, Glenn D., and Hugh Maginnis. Interest Rate Swaps: Their Use In Financing Agriculture. No. 1701-2016-139231. 1986.
Putnam, R. D. (1993). Making Democracy Work: Civic Traditions in Modern Italy. Princeton University Press.
Rahman, M. T. (2017). Role of agriculture in Bangladesh economy: uncovering the problems and challenges. International Journal of Business and Management Invention, 6(7).
Risk Management: Principles and Practices. 1999. Charlottesville, VA: AIMR.
Raucci, G.L., R.L.F. Silveira and D.H. Capitani, 2018. Development of weather derivatives: Evidence from Brazilian Soybean market. Agricultural & Applied Economics Association Annual Meeting at: Washington, D.C, 2018. pp: 1-16.
Saha, Bimal Kumar,1985, ‘Agricultural Credit in Bangladesh and the Role of Institutions: Problems and Issues’, Paper at the Fifth National Conference of the Agricultural Economists’ Association, July 18- 19,1985, Dhaka.
Shi, H. and Z. Jiang, 2016. The efficiency of composite weather index insurance in hedging rice yield risk: Evidence from China. Agricultural Economics, 47(3): 319-328. Available at: https://doi.org/10.1111/agec.12232.
Sundaram, R. K. (2012). Derivatives in financial market development. International Growth Centre London, September. Pobrano z: http://pages. stern. nyu. edu/ersundara.
Uddin, A., Chowdhury, M. A. F., & Islam, M. N. (2017). Determinants of financial inclusion in Bangladesh: Dynamic GMM & quantile regression approach. The Journal of Developing Areas, 51(2), 221-237.
Vashishtha, A., & Kumar, S. (2010). Development of financial derivatives market in India-a case study. International Research Journal of Finance and Economics, 37(37), 15-29.
Yang, J., & Leatham, D. J. (1997). The Use of Financial Derivatives in Agriculture and an Annotated Bibliography.
Downloads
Published
Issue
Section
License
Copyright (c) 2025 MD. ROSTAM ALI (Author)
This work is licensed under a Creative Commons Attribution 4.0 International License.
