Fox Business News published an article on how China’s is so desperate to rebuild pig herds after swine fever that its banks are experimenting with loans to farmers backed by a novel asset: their hogs. Senior Research Fellow Yanyan Liu says banks would face challenges both in valuing pigs and enforcing their rights if loans went bad. Hog prices are volatile, meaning banks could face losses if pig prices fell after they had made loans and they later had to seize their collateral. And banks would need to develop systems to value hogs, and monitor, manage, or even dispose of them, if they were to end up owning pigs.
China serves up pig-backed loans for its hogtied farmers (Fox Business News)
September 14, 2020