SLOVAK FARM FINANCIAL PROBLEMS: PROFITABILITY, DEBT, LATE PAYMENT, AND LACK OF CREDIT

The paper assesses the farm financial problems in the Slovak Republic and provides recommendations for improving the situation. Although positive changes have occurred in the financing of agriculture in the Slovak Republic since becoming an independent country in 1993, problems still remain. Many farms remain unprofitable, farms still have old debt that was issued prior to 1990 and uncollectible debt that was issued since 1990, farms are not paid promptly for the products they sell, and there continues to be difficulty in farms attracting credit. Recommendations for improving the delinquent farm liquidation decision, farm profitability, prompt payment, and credit access are provided.Agricultural Finance,

GROWTH IN AGRICULTURAL LOAN MARKET SHARE FOR ARKANSAS COMMERCIAL BANKS

Changes in commercial bank market shares of farm debt are decomposed into portfolio decisions loanable funds availability and loan market size for 64 counties in Arkansas from 1986 through 1990. A seemingly unrelated regression model is hypothesized to identify county characteristics that are related to changes in commercial bank market shares. Regression results indicate that county differences in economic activity, the relative risk associated with agriculture, farm structure and regional location contributed to changes in commercial bank market shares. The results imply a market niche for rural commercial banks emphasizing agricultural loans in the presence of unlimited branch banking.Banks, Farm debt, Loan portfolio, Market share, Agricultural Finance,

DEBT DEPRECIATION, CONGLOMERATION, AND CREDIT CONSTRAINTS: EVIDENCE FROM CATTLE CYCLES

We search for evidence consistent with the notion that endogenous credit constraints play a role in cattle cycles. Beef cow inventories are found to be more sensitive to credit constraints during periods of falling than rising asset values. Inventories of heifer replacements exhibit only weak sensitivity to credit constraints during periods of falling asset values.Financial Economics, Livestock Production/Industries,

IMPACTS OF FINANCIAL CHARACTERISTICS AND THE BOOM-BUST CYCLE ON THE FARM INVENTORY-CASH FLOW RELATIONSHIP

The sensitivity of farm inventory investment to movements in cash flow is tested. Inventories should be sensitive to shifts in cash flow because inventory investment is readily reversible and inventories are a significant portion of assets. Investment models estimated with Kansas farm panel data indicate that: (a) farms absorb internal finance shocks by adjusting inventories, (b) the inventory investment of livestock and high-debt farms are more sensitive to movements in cash flow than crop and low-debt farms, and (c) inventory investment is more sensitive to cash flow during the 1981-86 bust and the 1987-92 recovery than during the 1975-80 boom.Cash flow, Credit constraints, Farm cycles, Farm inventories, Investment, Investment models, Agricultural Finance,

INDEPENDENT COMMERCIAL BANK MERGERS AND AGRICULTURAL LENDING CONCENTRATION

In an era of rapid consolidation in banking, the effect of mergers on the availability of credit to agricultural businesses is unclear. Commercial bank mergers have profoundly altered the urban credit marketplace and are positioned to do the same for the agricultural credit marketplace. Adjustment models are estimated with data on independent bank consolidations from 1988 through 1995. The regression results bode well for agricultural lending if acquiring banks have larger concentrations of assets in agriculture than acquired banks. Conversely, if acquiring banks have smaller concentrations than acquired banks, acquisitions have a negative impact on agricultural lending. Since most acquiring banks have smaller agricultural loan concentrations than acquired banks, there is concern for agricultural lending. However, other lenders are likely to fill credit gaps that develop.acquisition, agricultural loan portfolio, banks, consolidation, merger, Agricultural Finance, Industrial Organization,

FACTORS DETERMINING FSA GUARANTEED LOAN LOSS CLAIM ACTIVITY IN THE U.S. FOR 1990-1997

The study identifies farm operator and economic characteristics explaining variation in FSA guaranteed loan loss claims rates. Regression models using state-level data are estimated. Debt-to-asset ratios, interest rates, off-farm income and bank loan-to-asset ratios explain FO loss rates. Farm size and bank loan-to-asset ratios are important to OL loss rates.Agricultural Finance,

Factors Determining the Use of Guaranteed Loans by U.S. Commercial Banks

Financial Economics,

Models of FSA Guaranteed Loan Use Volume and Loss Claims among Arkansas Commercial Banks

The Farm Service Agency (FSA) guaranteed loan programs are an important source of credit to production agriculture. The two major guaranteed loan programs are the operating loan (OL) program and the farm ownership (FO) loan program. Guaranteed loans insure payment to the lender of up to 95% of the losses in the event of borrower default. FSA has historically been involved in lending to farm operators via direct loans, but emphasis has changed over the last two decades to making guaranteed loans the primary source of FSA associated lending to production agriculture. This study seeks to determine what characteristics of banks and the lending environment from 1990-1995 motivated Arkansas banks to use guaranteed loans and how the level of participation is related to such factors. In addition, factors are identified that indicate the likelihood of banks paying loss claims. Regression methods are used to identify these factors and the data base uses observations on individual Arkansas commercial banks for up to six years

Arkansas Landlord Selection of Land-Leasing Contract Type and Terms

Land leasing is a major source of the land input to production agriculture. Responses from a survey of landlords leasing crop land in Arkansas are analyzed to better understand those factors motivating landlords in the type of lease they select and the terms of those leases. Probit models are estimated to determine the relative importance of variables representing credit constraint, agency problem, and risk aversion factors. Regression models then estimate the impact of site, landlord, and tenant characteristics on contract terms – the percentage of crop and cost sharing arrangements between landlord and tenant. Probit results suggest credit constraint factors influence lease-type selection. Risk aversion, managerial ability, and social capital factors are also supported. Regression models show that land and crop characteristics are significant determinants of contract terms.Land leasing, Probit, Contract, Production agriculture, Land Economics/Use,

CONTRACT CHOICE SELECTION WITH LAND-LEASING AGREEMENTS

This study tests cropland contract hypotheses utilizing a landlord data set. Ordered probit and classical regression models are estimated and presented identifying factors that affect the contract type selection and terms. Results suggest credit constraints are a viable land-leasing hypothesis. Risk aversion, managerial ability, and social capital are also supported.Land Economics/Use,