Hostname: page-component-cd9895bd7-hc48f Total loading time: 0 Render date: 2024-12-23T14:09:21.182Z Has data issue: false hasContentIssue false
  • English
  • Français

Financing Constraints and Access to Credit in a PostcrisisEnvironment: Evidence from New Farmers in Alabama

Published online by Cambridge University Press:  26 January 2015

Valentina Hartarska  and
Dennis Nadolnyak
Valentina Hartarska
Affiliation:
Department of Agricultural Economics and Rural Sociology, Auburn University, Auburn, Alabama
Dennis Nadolnyak
Affiliation:
Department of Agricultural Economics and Rural Sociology, Auburn University, Auburn, Alabama
Get access Rights & Permissions [Opens in a new window]

Abstract

We use survey data to study the degree to which new farming operations inAlabama were financially constrained after the 2008 financial crisis. Next,we control for farmers' self-selection out of the credit market and identifywhich farmers were able to secure loans during the period of 2009–2010. Theresults show that new farmers that started any part of their operation after2005 were financially constrained but no evidence that their financingconstraints were affected by the crisis. As expected, we find that lendingwas collateral-driven, although lenders also considered farmers'profitability and cash flows.

Keywords

financing constraintsaccess to creditfinancial crisisbeginning farmersG31Q12Q14
Type
Research Article
Information
Journal of Agricultural and Applied Economics , Volume 44 , Issue 4 , November 2012 , pp. 607 - 621
Copyright
Copyright © Southern Agricultural Economics Association 2012

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Barry, P., Bierlen, R., and Sotomayor, N. “Financial Structure of Farm Business under Imperfect Capital Markets.” American Journal of Agricultural Economics 82(2000):920–33.10.1111/0002-9092.00091Google Scholar
Berger, A., and Udell, G. “The Economics of Small Business Finance: The Roles of Private Equity and Debt Markets in the Financial Growth Cycle.” Journal of Banking & Finance 22(1998):613–73.10.1016/S0378-4266(98)00038-7Google Scholar
Bierlen, R., and Featherstone, A. “Fundamental q, Cash Flow, and Investment: Evidence from Panel Data.” The Review of Economics and Statistics 80(1998):427–35.10.1162/003465398557663Google Scholar
Boucher, S., Carter, M., and Guirkinger, C. “Risk Rationing and Wealth Effects in Credit Markets: Theory and Implications for Agricultural Development.” American Journal of Agricultural Economics 90(2008):409–23.10.1111/j.1467-8276.2007.01116.xGoogle Scholar
Briggeman, B.C. “The Role of Debt in Farmland Ownership.” Choices 26(2nd Quarter, 2011). Internet site: http://www.choicesmagazine.org/choices-magazine/theme-articles/farmland-values/the-role-of-debt-in-farmland-ownership.Google Scholar
Briggeman, B.C., Gunderson, M.A., and Gloy, B.A. “Financial Health of Agricultural Lenders.” American Journal of Agricultural Economics 91(2009):1406–13.10.1111/j.1467-8276.2009.01356.xGoogle Scholar
Briggeman, B.C., Towe, C.A., and Morehart, M.J. “Credit Constraints: Their Existence, Determinants, and Implications for U.S. Farm and Nonfarm Sole Proprietorships.” American Journal of Agricultural Economics 91(2009):275–89.10.1111/j.1467-8276.2008.01173.xGoogle Scholar
Briggeman, B., and Zakrzewicz, C. “Can the Ag Credit Survey Predict National Credit Conditions?” Federal Reserve Bank of Kansas City Economic Review 94(2009):93–110.Google Scholar
Carreira, C, and Silva, F. “No Deep Pockets: Some Stylized Empirical Results on Firms Financial Constraints.” Journal of Economic Surveys 24(2010):731–53.10.1111/j.1467-6419.2009.00619.xGoogle Scholar
Cameron, A.C., and Trivedi, P.K. Microeconometrics: Methods and Applications. New York, NY: Cambridge University Press, 2005.Google Scholar
Chaddad, F., Cook, M., and Heckelei, T. “Testing for the Presence of Financing Constraints in U.S. Agricultural Cooperatives: An Investment Behavior Approach.” Journal of Agricultural Economics 56(2005):385–97.10.1111/j.1477-9552.2005.00027.xGoogle Scholar
McFadden, D.T., and Sureshwaran, S. “Innovations to Support Beginning Farmers and Ranchers,” Choices 26(2nd Quarter, 2011). Internet site: http://www.choicesmagazine.org/choices-magazine/theme-articles/innovations-to-support-beginning-farmers-and-ranchers/meme-overview-irmovations-to-support-beginning-farmers-and-ranchers.Google Scholar
Cleary, S., Povel, P., and Raith, M. “The U-Shaped Investment Curve: Theory and Evidence.” Journal of Financial and Quantitative Analysis 42(2007):1–40.10.1017/S0022109000002179S0022109000002179Google Scholar
Ellinger, P. “Financial Markets and Agricultural Credit at a Time of Uncertainty,” Choices 24,1(2009):32–35.Google Scholar
Ellinger, P. “Agricultural Banks Improve Profitability.” Farmdoc Daily, October 28, 2011. Internet site: http://www.farmdocdaily.illinois.edu/2011/10/agricultural_banks_improve_pro.html.Google Scholar
Fazzari, S., Hubbard, G., and Petersen, B. “Finance Constraints and Corporate Investment.” Brookings Papers on Economic Activity 1(1988):141–95.Google Scholar
Hartarska, V., and Mai, C. “Financing Constraints and the Family Farm: How Do Families React?” Paper presented at the Southern Agricultural Economics Association Annual Meeting, Dallas, TX, February 2-6, 2008.Google Scholar
Hartarska, V., and Nadolnyak, D. “An Impact Analysis of Microfinance in Bosnia.” World Development 26(2008):2605–19.Google Scholar
Hayashi, F. “Tobin's Marginal q and Average q: A Neoclassical Interpretation.” Econometrica: Journal of the Econometric Society 50(1982):213–24.10.2307/1912538Google Scholar
Hubbard, G.R. “Capital Market Imperfections and Investment.” Journal of Economic Literature 36(1998):192–225.Google Scholar
Jensen, M., and Meckling, W.H. “Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure.” Journal of Financial Economics 3(1976):305–60.10.1016/0304-405X(76)90026-XGoogle Scholar
Klinefelter, D., and Penson, J. “Growing Complexity of Agricultural Lending Decisions.” Choices 20,1(2005):7–12.Google Scholar
Mishra, A., and Morehart, M.J. “Off-farm Investment of Farm Households: A Logit Analysis.” Agricultural Finance Review 61(2001):88–101.10.1108/00214770180001118Google Scholar
Mishra, A., Moss, C., and Erickson, K. “The Role of Credit Constraints and Government Subsidies in Farmland Valuations in the U.S.: An Options Pricing Model Approach.” Empirical Economics 34(2008):285–97.10.1007/s00181-007-0122-9Google Scholar
Myers, S.C., and Majluf, N.S. “Corporate Financing and Investment Decision When Firms Have Information That Investors Do Not Have.” Journal of Financial Economics 13(1984):187–221.10.1016/0304-405X(84)90023-0Google Scholar
Stiglitz, J.A., and Weiss, A. “Credit Rationing in Markets with Imperfect Information.” The American Economic Review 71(1981):912–27.Google Scholar
Thijssen, G. “Farmers Investment Behavior: An Empirical Assessment of Two Specifications.” American Journal of Agricultural Economics 78(1996):166–74.10.2307/1243788Google Scholar
Van de Ven, W.P.M.M., and Pragg, B.M.S. Van “The Demand for Deductibles in Private Health Insurance: A Probit Model with Sample Selection.” Journal of Econometrics 17(1981):229–52.10.1016/0304-4076(81)90028-2Google Scholar