Changes in Debt Patterns and Financial Structure of Farm Businesses: A Double Hurdle Approach

Abstract

This paper uses a double hurdle model to help explain one aspect of the changing capital structure of U.S. production agriculture--the increase in the number of debt free farms. Our findings suggest that nonfinancial factors, such as operator age, region, risk aversion, and financial factors such as debt service ability and the cost of capital play significant roles in distinguishing borrowers from non borrowers.farm debt, farm credit, double-hurdle model, farm businesses, Agricultural Finance,