STOCHASTIC DYNAMIC MODELING: AN AID TO AGRICULTURAL LENDER DECISION MAKING

Factors affecting a lenderÂ’s decision to grant farmers operating credit in North Dakota are quantified in an intertemporal loan profitability model using stochastic dynamic programming. Experimental data obtained from a panel of lenders demonstrates the sensitivity of an optimal policy to changes in a lenderÂ’s discount rate, a borrowerÂ’s repayment status, and patronage. The value of credit scoring models that appraise a borrowerÂ’s credit worthiness also is determined.Agricultural Finance,

Role of Extension in a Research University

University administrators are placing greater emphasis on research and extramural funding in an effort to raise their stature among peer institutions. While Extension faculty could feel threatened, they actually have an opportunity to fill the void in land grant mission being vacated by research and teaching faculty. Assuming great roles in applied research and teaching activities will strengthen traditional Extension programs and provide new opportunities for growth.Teaching/Communication/Extension/Profession,

VALUE OF SOCIAL CAPITAL TO MID-SIZED NORTHERN PLAINS FARMS

As farms increase in size, operators often face the difficult decision of remaining loyal to local merchants or obtaining volume discounts from more distant input suppliers. When farmers bypass local merchants and buy inputs in volume from a wholesaler, they often realize a price discount but forego many services including credit forebearance. In essence, when farmers buy locally, they pay higher prices, which decreases profits and increases financial risk, but generates social capital which can be drawn upon during periods of economic adversity later in the form of credit forebearance. A theoretical model of farm financial risk evaluates borrower behavior in light of cash flow constraints, volume discounts, and social capital. Monte-carlo simulation was used to empirically apply the model to a representative 2,000-acre Northern Plains crop farm. The stochastic simulation model embodied local price and yield distributions, tax policy, and financial repayment risks. A survey of local input suppliers and lenders provided key information on levels of price discount and credit forebearance. Competition among suppliers resulted in less difference between retail and wholesale prices than expected a priori. Results of the analysis delineated the financial risks involved and value of social capital received in the form of credit forebearance. The distribution of year-end available funds when inputs were purchased locally had a slightly lower mean and longer left tail. While a longer and bulkier left tail appeared to present the farm with additional financial risk, it was actually the result of additional borrowing arising from credit forebearance. If forebearance were not available, the firm would have been bankrupt. In this model, bankruptcy occurred with 2.6 percent frequency. Personal exemptions provided under statutory bankruptcy provisions altered the shape of the left tail.Social, capital, financial risk, simulation, stochastic, Farm Management, Institutional and Behavioral Economics,

Flutter of a Low-Aspect-Ratio Rectangular Wing

A flutter test of a low-aspect-ratio rectangular wing was conducted in the Langley Transonic Dynamics Tunnel (TDT). The model used in this flutter test consisted of a rigid wing mounted to the wind-tunnel wall by a flexible, rectangular beam. The flexible support shaft was connected to the wing root and was cantilever mounted to the wind-tunnel wall. The wing had an aspect ratio of 1.5 based on the wing semispan and an NACA 64A010 airfoil shape. The flutter boundary of the model was determined for a Mach number range of 0.5 to 0.97. The shape of the transonic flutter boundary was determined. Actual flutter points were obtained on both the subsonic and supersonic sides of the flutter bucket. The model exhibited a deep transonic flutter bucket over a narrow range of Mach number. At some Mach numbers, the flutter conditions were extrapolated using a subcritical response technique. In addition to the basic configuration, modifications were made to the model structure such that the first bending frequency was changed without significantly affecting the first torsion frequency. The experiment showed that increasing the bending stiffness of the model support shaft through these modifications lowered the flutter dynamic pressure. Flutter analysis was conducted for the basic model as a comparison with the experimental results. This flutter analysis was conducted with subsonic lifting-surface (kernel function) aerodynamics using the k method for the flutter solution

Exploratory flutter test in a cryogenic wind tunnel

A model consisting of a rigid wing with an integral, flexible beam support that was cantilever mounted from the wall in the NASA LaRC 0.3-m transonic cryogenic tunnel was used in a flutter analysis study. The wing had a rectangular planform of aspect ratio 1.5 and a 64A010 airfoil. Various considerations and procedures for conducting flutter tests in a cryogenic wind tunnel were evaluated. Flutter onset conditions were established from extrapolated subcritical response measurements. A flutter boundary was determined at cryogenic temperatures over a Mach number M range from 0.5 to 0.9. Flutter was obtained at two different Reynolds numbers R at M = 0.5 (R = 4.4 and 18.4 x 10 to the 6th power) and at M = 0.8 (R = 5.0 and 10.4 x 10 to the 6th power). Flutter analyses using subsonic lifting surface (kernel function) aerodynamics were made over the range of test conditions. To evaluate the Reynolds number effects at M = 0.5 and 0.8, the experimental results were adjusted using analytical trends to account for differences in the model test temperatures and mass ratios. The adjusted experimental results indicate that increasing Reynolds number from 5.0 to 20.0 x 10 to the 6th power decreased the dynamic pressure by 4.0 to 6.5 percent at M = 0.5 and 0.8

RURAL SMALL BUSINESS FINANCE: EVIDENCE FROM THE 1998 SURVEY OF SMALL BUSINESS FINANCES

The 1998 Survey of Small Business Finances provides robust information on the financing of small businesses including an overview of their firm's organization, financial characteristics, and credit use. Information from the survey is used in this study to compare the financial characteristics of urban and rural small businesses. Overall, rural small businesses have very similar financial characteristics, access to technology and financial services, sources of financial capital, and creditworthiness when compared to urban small businesses. Nonparametric rank order statistical methods were required when comparing dollar values of urban and rural small businesses because normality assumptions were violated due to the high concentration of small firms. On average, rural and urban small businesses were strong financially and profitable. Accounts receivable and inventory comprise nearly a third of total assets. Most were organized as either sole proprietorships or corporations. The majority of small businesses utilized computers, primarily for accounting/bookkeeping, administration, and email. Primary financial services are used for transactions and trade credit. Two-thirds of purchases involve trade credit from more than 20 trade credit suppliers, on average. Both urban and rural small businesses rely on a wide variety of sources for financing and use each to the same degree. Rural small businesses possess higher creditworthiness, but nearly one-fourth still report being delinquent on business obligations.rural, small, business, finances, survey, Community/Rural/Urban Development,