Pub Date : 2021-09-24DOI: 10.1108/afr-05-2021-0068
A. Stevens
PurposeThe purpose of this article is to document and evaluate patterns of nontraditional credit use among Wisconsin dairy farmers. Using a survey-based case study approach, this article analyzes farmer and farm characteristics, farmers’ utilization of credit and farmers’ perceptions of nontraditional lenders. The findings are connected to ongoing structural change in the dairy sector and economic theories of trade credit.Design/methodology/approachData were collected using an incentivized online survey of Wisconsin dairy farmers distributed through existing university and industry networks. A total of 16 farmers completed the survey. The sample is treated as a focus group case study, and participants’ responses are examined using summary statistics and correlational analyses to describe emergent patterns in the industry.FindingsAmong survey respondents who utilize agricultural credit, nearly 80% (11 of 14) borrow from at least one nontraditional lender, and nontraditional credit comprises 17% of their total borrowing, on average. Much of this borrowing occurs through the financial arm of a vendor and is used to finance equipment or machinery purchases. Despite widespread use of nontraditional credit, no surveyed farmers preferred nontraditional lenders over traditional lenders.Originality/valueThis is the first study to analyze the use of nontraditional credit specifically among Wisconsin dairy farmers. Dairy farming is a capital-intensive endeavor, and recent structural change in the sector has increased surviving dairy farmers' demand for credit.
{"title":"Nontraditional credit in the Wisconsin dairy industry","authors":"A. Stevens","doi":"10.1108/afr-05-2021-0068","DOIUrl":"https://doi.org/10.1108/afr-05-2021-0068","url":null,"abstract":"PurposeThe purpose of this article is to document and evaluate patterns of nontraditional credit use among Wisconsin dairy farmers. Using a survey-based case study approach, this article analyzes farmer and farm characteristics, farmers’ utilization of credit and farmers’ perceptions of nontraditional lenders. The findings are connected to ongoing structural change in the dairy sector and economic theories of trade credit.Design/methodology/approachData were collected using an incentivized online survey of Wisconsin dairy farmers distributed through existing university and industry networks. A total of 16 farmers completed the survey. The sample is treated as a focus group case study, and participants’ responses are examined using summary statistics and correlational analyses to describe emergent patterns in the industry.FindingsAmong survey respondents who utilize agricultural credit, nearly 80% (11 of 14) borrow from at least one nontraditional lender, and nontraditional credit comprises 17% of their total borrowing, on average. Much of this borrowing occurs through the financial arm of a vendor and is used to finance equipment or machinery purchases. Despite widespread use of nontraditional credit, no surveyed farmers preferred nontraditional lenders over traditional lenders.Originality/valueThis is the first study to analyze the use of nontraditional credit specifically among Wisconsin dairy farmers. Dairy farming is a capital-intensive endeavor, and recent structural change in the sector has increased surviving dairy farmers' demand for credit.","PeriodicalId":46748,"journal":{"name":"Agricultural Finance Review","volume":" ","pages":""},"PeriodicalIF":1.6,"publicationDate":"2021-09-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48084906","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-09-03DOI: 10.1108/afr-09-2020-0140
Katarina Labajova, J. Höhler, C. Lagerkvist, Jörg Müller, Jens Rommel
PurposePeople’s tendency to overestimate their ability to control random events, known as illusion of control, can affect financial decisions under uncertainty. This study developed an artifactual field experiment on illusion of control for a farm machinery investment.Design/methodology/approachIn an experiment with two treatments, the individual farmer was either given or not given a sense of control over a random outcome. After each decision, the authors elicited perceived control, and a questionnaire collected additional indirect measures of illusion of control from 78 German farmers and 10 farm advisors.FindingsThe results did not support preregistered hypotheses of the presence of illusion of control. This null result was robust over multiple outcomes and model specifications. The findings demonstrate that cognitive biases may be small and difficult to replicate.Research limitations/implicationsThe sample is not representative for the German farming population. The authors discuss why the estimated treatment effect may represent a lower bound of the true effect.Originality/valueIllusion of control is well-studied in laboratory settings, but little is known about the extent to which farmers’ behavior is influenced by illusion of control.
{"title":"Illusion of control in farmers’ investment and financing decisions","authors":"Katarina Labajova, J. Höhler, C. Lagerkvist, Jörg Müller, Jens Rommel","doi":"10.1108/afr-09-2020-0140","DOIUrl":"https://doi.org/10.1108/afr-09-2020-0140","url":null,"abstract":"PurposePeople’s tendency to overestimate their ability to control random events, known as illusion of control, can affect financial decisions under uncertainty. This study developed an artifactual field experiment on illusion of control for a farm machinery investment.Design/methodology/approachIn an experiment with two treatments, the individual farmer was either given or not given a sense of control over a random outcome. After each decision, the authors elicited perceived control, and a questionnaire collected additional indirect measures of illusion of control from 78 German farmers and 10 farm advisors.FindingsThe results did not support preregistered hypotheses of the presence of illusion of control. This null result was robust over multiple outcomes and model specifications. The findings demonstrate that cognitive biases may be small and difficult to replicate.Research limitations/implicationsThe sample is not representative for the German farming population. The authors discuss why the estimated treatment effect may represent a lower bound of the true effect.Originality/valueIllusion of control is well-studied in laboratory settings, but little is known about the extent to which farmers’ behavior is influenced by illusion of control.","PeriodicalId":46748,"journal":{"name":"Agricultural Finance Review","volume":" ","pages":""},"PeriodicalIF":1.6,"publicationDate":"2021-09-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44165458","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-08-25DOI: 10.1108/afr-05-2021-0065
Clayton P. Michaud
PurposeThis paper examines the effect of overconfident yield forecasting (optimism bias) on crop insurance coverage level choices across both yield and revenue insurance.Design/methodology/approachThis study simulates a representative producer’s preferred coverage level for both yield and revenue insurance under three potential models of decision-making and four potential manifestations of overconfident yield forecasting. The study then uses this framework to examine how coverage level choices change as overconfidence increases (decreases).FindingsAs overconfidence increases, producers prefer lower levels of crop insurance coverage than they would otherwise prefer, with extreme overconfidence inducing farmers to buy no insurance at all. While overconfidence affects cross-coverage demand for revenue and yield insurance similarly, this effect is more pronounced for yield insurance. Cross-coverage level demand for revenue insurance is relatively stable across changes in the correlation between prices and yields.Practical implicationsThis research has important implications for crop insurance subsidy design and crop insurance demand modeling.Originality/valueThere is a growing body of literature suggesting that producers are overconfident with regard to their future yield risk and that this bias reduces their willingness to pay for risk management tools such as crop insurance. This is the first study to look at how such overconfidence affects cross-coverage level demand for crop insurance.
{"title":"The effects of overconfident yield forecasting on cross-coverage level crop insurance demand","authors":"Clayton P. Michaud","doi":"10.1108/afr-05-2021-0065","DOIUrl":"https://doi.org/10.1108/afr-05-2021-0065","url":null,"abstract":"PurposeThis paper examines the effect of overconfident yield forecasting (optimism bias) on crop insurance coverage level choices across both yield and revenue insurance.Design/methodology/approachThis study simulates a representative producer’s preferred coverage level for both yield and revenue insurance under three potential models of decision-making and four potential manifestations of overconfident yield forecasting. The study then uses this framework to examine how coverage level choices change as overconfidence increases (decreases).FindingsAs overconfidence increases, producers prefer lower levels of crop insurance coverage than they would otherwise prefer, with extreme overconfidence inducing farmers to buy no insurance at all. While overconfidence affects cross-coverage demand for revenue and yield insurance similarly, this effect is more pronounced for yield insurance. Cross-coverage level demand for revenue insurance is relatively stable across changes in the correlation between prices and yields.Practical implicationsThis research has important implications for crop insurance subsidy design and crop insurance demand modeling.Originality/valueThere is a growing body of literature suggesting that producers are overconfident with regard to their future yield risk and that this bias reduces their willingness to pay for risk management tools such as crop insurance. This is the first study to look at how such overconfidence affects cross-coverage level demand for crop insurance.","PeriodicalId":46748,"journal":{"name":"Agricultural Finance Review","volume":"1 1","pages":""},"PeriodicalIF":1.6,"publicationDate":"2021-08-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41349292","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
PurposeThis paper aims to examine the determinants of rural dwellers financial literacy in Ghana.Design/methodology/approachA cross-sectional primary data set was used to estimate the factors influencing rural farm households' financial literacy using the IV-Tobit model.FindingsThe findings reveal that most rural residents are financially illiterate. The econometrics model results depicted that respondents' socioeconomic and demographic characteristics such as gender, income, age and education significantly affect financial literacy. Again, respondents who are risk seekers and listen or watch education programs are more likely to be financially literate.Research limitations/implicationsThe paper examined the determinants of rural dwellers financial literacy in four regions in Ghana. Future research should consider all or many regions for an informed generalization of findings.Practical implicationsThis paper provides evidence that rural dwellers are financially illiterate and it would require the policymakers or non-governmental organizations (NGOs) to establish a village or community group that comprises a wide range of bankers and government officials to help rural dwellers acquire some financial skills. Also, the positive relationship between media (whether respondent watches or listens to educational programs) and financial literacy implies that policymakers should focus on improving individuals' financial knowledge through training programs and utilize the media as a channel to propagate financial education to the public.Originality/valueAlthough previous studies have examined the determinants of financial literacy, little is known in developing countries and, in particular, rural communities. The authors fill this gap by contributing to the scanty existing literature in developing countries in several ways. First, this is the first study to examine the financial literacy level of rural dwellers in Ghana. Second, to not undermine the credibility of the estimation results, this study addresses the potential endogeneity issue, which other researchers have not adequately recognized. Finally, the study expands the scant literature on the subject and provides critical policy implications that will help policymakers formulate financial market policies that will contribute to rural dwellers financial literacy enhancement.
{"title":"Financial literacy and its determinants: the case of rural farm households in Ghana","authors":"Martinson Ankrah Twumasi, Yuansheng Jiang, Salina Adhikari, Caven Adu Gyamfi, Isaac Asare","doi":"10.1108/afr-06-2021-0078","DOIUrl":"https://doi.org/10.1108/afr-06-2021-0078","url":null,"abstract":"PurposeThis paper aims to examine the determinants of rural dwellers financial literacy in Ghana.Design/methodology/approachA cross-sectional primary data set was used to estimate the factors influencing rural farm households' financial literacy using the IV-Tobit model.FindingsThe findings reveal that most rural residents are financially illiterate. The econometrics model results depicted that respondents' socioeconomic and demographic characteristics such as gender, income, age and education significantly affect financial literacy. Again, respondents who are risk seekers and listen or watch education programs are more likely to be financially literate.Research limitations/implicationsThe paper examined the determinants of rural dwellers financial literacy in four regions in Ghana. Future research should consider all or many regions for an informed generalization of findings.Practical implicationsThis paper provides evidence that rural dwellers are financially illiterate and it would require the policymakers or non-governmental organizations (NGOs) to establish a village or community group that comprises a wide range of bankers and government officials to help rural dwellers acquire some financial skills. Also, the positive relationship between media (whether respondent watches or listens to educational programs) and financial literacy implies that policymakers should focus on improving individuals' financial knowledge through training programs and utilize the media as a channel to propagate financial education to the public.Originality/valueAlthough previous studies have examined the determinants of financial literacy, little is known in developing countries and, in particular, rural communities. The authors fill this gap by contributing to the scanty existing literature in developing countries in several ways. First, this is the first study to examine the financial literacy level of rural dwellers in Ghana. Second, to not undermine the credibility of the estimation results, this study addresses the potential endogeneity issue, which other researchers have not adequately recognized. Finally, the study expands the scant literature on the subject and provides critical policy implications that will help policymakers formulate financial market policies that will contribute to rural dwellers financial literacy enhancement.","PeriodicalId":46748,"journal":{"name":"Agricultural Finance Review","volume":" ","pages":""},"PeriodicalIF":1.6,"publicationDate":"2021-08-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47037207","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-08-11DOI: 10.1108/afr-12-2020-0177
W. Kölle, M. Buchholz, O. Musshoff
PurposeSatellite-based weather index insurance has recently been considered in order to reduce the high basis risk of station-based weather index insurance. However, the use of satellite data with a relatively low spatial resolution has not yet made it possible to determine the satellite indices free of disturbing landscape elements such as mountains, forests and lakes.Design/methodology/approachIn this context, the Normalized Difference Vegetation Index (NDVI) was used based on both Moderate Resolution Imaging Spectroradiometer (MODIS) (250 × 250 m) and high-resolution Landsat 5/8 (30 × 30 m) images to investigate the effect of a higher spatial resolution of satellite-based weather index contracts for hedging winter wheat yields. For three farms in north-east Germany, insurance contracts both at field and farm level were designed.FindingsThe results indicate that with an increasing spatial resolution of satellite data, the basis risk of satellite-based weather index insurance contracts can be reduced. However, the results also show that the design of NDVI-based insurance contracts at farm level also reduces the basis risk compared to field level. The study shows that higher-resolution satellite data are advantageous, whereas satellite indices at field level do not reduce the basis risk.Originality/valueTo the best of the author’s knowledge, the effect of increasing spatial resolution of satellite images for satellite-based weather index insurance is investigated for the first time at the field level compared to the farm level.
{"title":"Do high-resolution satellite indices at field level reduce basis risk of satellite-based weather index insurance?","authors":"W. Kölle, M. Buchholz, O. Musshoff","doi":"10.1108/afr-12-2020-0177","DOIUrl":"https://doi.org/10.1108/afr-12-2020-0177","url":null,"abstract":"PurposeSatellite-based weather index insurance has recently been considered in order to reduce the high basis risk of station-based weather index insurance. However, the use of satellite data with a relatively low spatial resolution has not yet made it possible to determine the satellite indices free of disturbing landscape elements such as mountains, forests and lakes.Design/methodology/approachIn this context, the Normalized Difference Vegetation Index (NDVI) was used based on both Moderate Resolution Imaging Spectroradiometer (MODIS) (250 × 250 m) and high-resolution Landsat 5/8 (30 × 30 m) images to investigate the effect of a higher spatial resolution of satellite-based weather index contracts for hedging winter wheat yields. For three farms in north-east Germany, insurance contracts both at field and farm level were designed.FindingsThe results indicate that with an increasing spatial resolution of satellite data, the basis risk of satellite-based weather index insurance contracts can be reduced. However, the results also show that the design of NDVI-based insurance contracts at farm level also reduces the basis risk compared to field level. The study shows that higher-resolution satellite data are advantageous, whereas satellite indices at field level do not reduce the basis risk.Originality/valueTo the best of the author’s knowledge, the effect of increasing spatial resolution of satellite images for satellite-based weather index insurance is investigated for the first time at the field level compared to the farm level.","PeriodicalId":46748,"journal":{"name":"Agricultural Finance Review","volume":" ","pages":""},"PeriodicalIF":1.6,"publicationDate":"2021-08-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43814358","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-06-29DOI: 10.1108/afr-12-2020-0179
Enoch Yao Vukey, I. Egyir, E. Asiedu, N. Kwapong
PurposeThis paper analysed the motives behind farmers' savings with Rural and Community Banks (RCBs) and the effect of these savings on rice yield in the Hohoe Municipality of the Volta region of Ghana.Design/methodology/approachA multi-stage sampling approach was used to draw a random sample of 222 rice farmers, and a structured questionnaire was employed to collect cross-sectional data. A Likert scale was used to rank the motive behind farmers' savings while the endogenous switching regression model was used to estimate the effect of savings on rice yield.FindingsThe results of the study showed that most farmers mobilise savings to enhance farm investment which is critical to increasing rice productivity. Improved labour and fertiliser use had a positive influence on rice yield, while farm size had an inverse relation with rice yield. Further, the findings show that savings with RCBs help mobilise the necessary finance to enhance rice productivity. In terms of the treatment effect of savings, the results indicate that farmers who patronise saving products of RCBs recorded a statistically significant average yield of 1.41 Mt/ha more than those not patronising saving products from any bank.Practical implicationsWhile the literature on agricultural finance focuses largely on credit, this study demonstrates that savings hold significant benefits for the development of agriculture through productivity gains. The importance of this demonstration is further shown by the fact that credit access depends on the ability to save in most developing countries.Social implicationsThere is a need to educate farmers about the essence of patronising formal savings products.Originality/valueThis study represents the first attempt at linking farmers' savings to agricultural productivity using an econometric methodology in Ghana. The study serves as a foundation paper and for that matter will serve as a guide to future research on savings mobilisation and agricultural productivity nexus.
{"title":"Increasing rice productivity in Ghana: Do savings with rural and community banks matter?","authors":"Enoch Yao Vukey, I. Egyir, E. Asiedu, N. Kwapong","doi":"10.1108/afr-12-2020-0179","DOIUrl":"https://doi.org/10.1108/afr-12-2020-0179","url":null,"abstract":"PurposeThis paper analysed the motives behind farmers' savings with Rural and Community Banks (RCBs) and the effect of these savings on rice yield in the Hohoe Municipality of the Volta region of Ghana.Design/methodology/approachA multi-stage sampling approach was used to draw a random sample of 222 rice farmers, and a structured questionnaire was employed to collect cross-sectional data. A Likert scale was used to rank the motive behind farmers' savings while the endogenous switching regression model was used to estimate the effect of savings on rice yield.FindingsThe results of the study showed that most farmers mobilise savings to enhance farm investment which is critical to increasing rice productivity. Improved labour and fertiliser use had a positive influence on rice yield, while farm size had an inverse relation with rice yield. Further, the findings show that savings with RCBs help mobilise the necessary finance to enhance rice productivity. In terms of the treatment effect of savings, the results indicate that farmers who patronise saving products of RCBs recorded a statistically significant average yield of 1.41 Mt/ha more than those not patronising saving products from any bank.Practical implicationsWhile the literature on agricultural finance focuses largely on credit, this study demonstrates that savings hold significant benefits for the development of agriculture through productivity gains. The importance of this demonstration is further shown by the fact that credit access depends on the ability to save in most developing countries.Social implicationsThere is a need to educate farmers about the essence of patronising formal savings products.Originality/valueThis study represents the first attempt at linking farmers' savings to agricultural productivity using an econometric methodology in Ghana. The study serves as a foundation paper and for that matter will serve as a guide to future research on savings mobilisation and agricultural productivity nexus.","PeriodicalId":46748,"journal":{"name":"Agricultural Finance Review","volume":" ","pages":""},"PeriodicalIF":1.6,"publicationDate":"2021-06-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48349013","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-06-09DOI: 10.1108/AFR-01-2021-0011
L. Robison, P. Barry
PurposeThis paper aims to use coordinated financial statements' system properties that include exogenous and endogenous variables to answer important questions. These questions include the following: What is the financial condition of the firm? What if there is a change in the firm's exogenous variable(s) – how will the financial condition of the firm change? And, how much of a change in the firm's exogenous variable(s) is required for the firm to reach its financial goal(s)?Design/methodology/approachThis paper uses coordinated financial statements to construct solvency, profitability, efficiency, liquidity and leverage (SPELL) ratios to answer the question: what is the financial condition of the firm? It answers what-if questions by changing an exogenous variable(s) and recalculating SPELL ratios. It answers how-much questions by using Excel's Goal Seek algorithm to find the required change in an exogenous variable to reach a firm's goal.FindingsThe authors find that coordinated financial statements' system properties can be used to answer important what-is, what-if and how-much questions about the firm.Research limitations/implicationsThe usefulness of coordinated financial statements' system properties to answer what-is, what-if and how-much questions about the firm depends – mostly on the accuracy of exogenous data used to represent the firm's external financial environment. Furthermore, the usefulness of what-if and how-much analysis depends on how appropriate the changes are in exogenous variables used to represent alternative scenarios.Practical implicationsUsing coordinated financial statements' system properties to answer what-is, what-if and how-much questions provides the firm's financial manager the tools to not only asses the firm's current financial condition but also to assess its ability to respond to opportunities and threats posed by future scenarios.Social implicationsThe ability to assess the financial condition of a firm and to assess its strengths and weaknesses in key to making sound financial decisions. In addition, the consistency imposed on coordinated financial statements makes it an effective tool for discovering errors in its data.Originality/valueThe authors know of no similar work.
{"title":"Coordinated financial statements: what-is, what-if and how-much questions","authors":"L. Robison, P. Barry","doi":"10.1108/AFR-01-2021-0011","DOIUrl":"https://doi.org/10.1108/AFR-01-2021-0011","url":null,"abstract":"PurposeThis paper aims to use coordinated financial statements' system properties that include exogenous and endogenous variables to answer important questions. These questions include the following: What is the financial condition of the firm? What if there is a change in the firm's exogenous variable(s) – how will the financial condition of the firm change? And, how much of a change in the firm's exogenous variable(s) is required for the firm to reach its financial goal(s)?Design/methodology/approachThis paper uses coordinated financial statements to construct solvency, profitability, efficiency, liquidity and leverage (SPELL) ratios to answer the question: what is the financial condition of the firm? It answers what-if questions by changing an exogenous variable(s) and recalculating SPELL ratios. It answers how-much questions by using Excel's Goal Seek algorithm to find the required change in an exogenous variable to reach a firm's goal.FindingsThe authors find that coordinated financial statements' system properties can be used to answer important what-is, what-if and how-much questions about the firm.Research limitations/implicationsThe usefulness of coordinated financial statements' system properties to answer what-is, what-if and how-much questions about the firm depends – mostly on the accuracy of exogenous data used to represent the firm's external financial environment. Furthermore, the usefulness of what-if and how-much analysis depends on how appropriate the changes are in exogenous variables used to represent alternative scenarios.Practical implicationsUsing coordinated financial statements' system properties to answer what-is, what-if and how-much questions provides the firm's financial manager the tools to not only asses the firm's current financial condition but also to assess its ability to respond to opportunities and threats posed by future scenarios.Social implicationsThe ability to assess the financial condition of a firm and to assess its strengths and weaknesses in key to making sound financial decisions. In addition, the consistency imposed on coordinated financial statements makes it an effective tool for discovering errors in its data.Originality/valueThe authors know of no similar work.","PeriodicalId":46748,"journal":{"name":"Agricultural Finance Review","volume":" ","pages":""},"PeriodicalIF":1.6,"publicationDate":"2021-06-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43793972","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-06-08DOI: 10.1108/AFR-02-2021-0016
Arnold Missiame, P. Irungu, R. Nyikal, Grace Darko Appiah-Kubi
PurposeThe study aims to estimate the rates of exposure to, and adoption of, rural bank credit programs by smallholder farmers in rural Ghana and the factors responsible for those rates.Design/methodology/approachThe study used a random sample of 300 smallholder farmers in the Fanteakwa District of Ghana, obtained through the multistage sampling technique. The study also employed the average treatment effects approach to estimate the average treatment effect of farmers’ exposure to rural bank credit programs, on their adoption of such programs.FindingsThe actual adoption rate is approximately 41%, and the potential, conditional on the whole population being aware of rural bank credit programs, is approximately 61%. Accordingly, there is a gap of about 20% in the adoption of rural bank credit programs, and is due to the incomplete exposure of smallholder farmers to the rural bank credit programs. Age of the household head, access to extension services, membership in farmer-based organizations and active savings accounts with a rural bank are the major contributors to smallholder farmer exposure to and the adoption of rural bank credit programs.Originality/valueThe current study is the first of its kind to be conducted in Ghana on rural bank credit programs. It takes into account the extent to which smallholder farmers are exposed to such credit programs and how it influences their decisions to access or adopt.
{"title":"Adoption of rural bank credit programs among smallholder farmers in Ghana: an average treatment effect estimation of rates of exposure and adoption and their determinants","authors":"Arnold Missiame, P. Irungu, R. Nyikal, Grace Darko Appiah-Kubi","doi":"10.1108/AFR-02-2021-0016","DOIUrl":"https://doi.org/10.1108/AFR-02-2021-0016","url":null,"abstract":"PurposeThe study aims to estimate the rates of exposure to, and adoption of, rural bank credit programs by smallholder farmers in rural Ghana and the factors responsible for those rates.Design/methodology/approachThe study used a random sample of 300 smallholder farmers in the Fanteakwa District of Ghana, obtained through the multistage sampling technique. The study also employed the average treatment effects approach to estimate the average treatment effect of farmers’ exposure to rural bank credit programs, on their adoption of such programs.FindingsThe actual adoption rate is approximately 41%, and the potential, conditional on the whole population being aware of rural bank credit programs, is approximately 61%. Accordingly, there is a gap of about 20% in the adoption of rural bank credit programs, and is due to the incomplete exposure of smallholder farmers to the rural bank credit programs. Age of the household head, access to extension services, membership in farmer-based organizations and active savings accounts with a rural bank are the major contributors to smallholder farmer exposure to and the adoption of rural bank credit programs.Originality/valueThe current study is the first of its kind to be conducted in Ghana on rural bank credit programs. It takes into account the extent to which smallholder farmers are exposed to such credit programs and how it influences their decisions to access or adopt.","PeriodicalId":46748,"journal":{"name":"Agricultural Finance Review","volume":" ","pages":""},"PeriodicalIF":1.6,"publicationDate":"2021-06-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45464949","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-06-01DOI: 10.1108/AFR-09-2020-0149
Emine Kaya, E. Kadanali
PurposeThis study aims to determine the nexus between agricultural production and agricultural loans for the period Q1 2003–Q4 2018 in Turkey.Design/methodology/approachThe authors employ the time-series analyses within the scope of the study. Firstly, they run the Engle–Granger two-step cointegration test and the Toda–Yamamoto causality analysis. They also use the dynamic ordinary least squares (DOLS) model estimator and estimate the vector autoregression model for predicting the dynamic structure of time series.FindingsThe results of time series analyses reveal that the variables are cointegrated and there are causal relationships between agricultural loans and agricultural production. Also, the variance decomposition findings indicate that the effect of agricultural loans provided by development-investment banks and participation banks on agricultural production has increased over the years, and the deposit banks have a high impact on agricultural production. The results of the DOLS model indicate that agricultural loans have a positive effect on agricultural production.Originality/valueThis research is one of the few studies that comprehensively determines the direction of nexus between agricultural production and agricultural loans in Turkey economy. This is the first contribution of the study in the literature. Another contribution of this study is to investigate the nexus between agricultural production and agricultural loans for banking sector groups. Unlike other studies in the literature, this study calculates the variance decomposition by going beyond unit root and cointegration tests. Thus, this study has deep findings.
{"title":"The nexus between agricultural production and agricultural loans for banking sector groups in Turkey","authors":"Emine Kaya, E. Kadanali","doi":"10.1108/AFR-09-2020-0149","DOIUrl":"https://doi.org/10.1108/AFR-09-2020-0149","url":null,"abstract":"PurposeThis study aims to determine the nexus between agricultural production and agricultural loans for the period Q1 2003–Q4 2018 in Turkey.Design/methodology/approachThe authors employ the time-series analyses within the scope of the study. Firstly, they run the Engle–Granger two-step cointegration test and the Toda–Yamamoto causality analysis. They also use the dynamic ordinary least squares (DOLS) model estimator and estimate the vector autoregression model for predicting the dynamic structure of time series.FindingsThe results of time series analyses reveal that the variables are cointegrated and there are causal relationships between agricultural loans and agricultural production. Also, the variance decomposition findings indicate that the effect of agricultural loans provided by development-investment banks and participation banks on agricultural production has increased over the years, and the deposit banks have a high impact on agricultural production. The results of the DOLS model indicate that agricultural loans have a positive effect on agricultural production.Originality/valueThis research is one of the few studies that comprehensively determines the direction of nexus between agricultural production and agricultural loans in Turkey economy. This is the first contribution of the study in the literature. Another contribution of this study is to investigate the nexus between agricultural production and agricultural loans for banking sector groups. Unlike other studies in the literature, this study calculates the variance decomposition by going beyond unit root and cointegration tests. Thus, this study has deep findings.","PeriodicalId":46748,"journal":{"name":"Agricultural Finance Review","volume":" ","pages":""},"PeriodicalIF":1.6,"publicationDate":"2021-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43614740","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-05-06DOI: 10.1108/AFR-12-2020-0178
B. Jablonski, J. Hadrich, Allison Bauman
PurposeThe Agriculture Improvement Act of 2018 directed the United States Department of Agriculture (USDA) Risk Management Association to investigate a policy targeted to farms and ranches that sell through local food markets. However, there is no available research that quantitatively documents the extent to which local food producers utilize Federal crop insurance.Design/methodology/approachThe authors utilize 2013–2016 USDA Agricultural Resource Management Survey data to compare farms and ranches with sales through local food markets to those with and without Federal crop insurance expenditure, as well as the distribution of Federal crop expenditure, across market channels and scales.FindingsThere is a little variation in Federal crop insurance expenditure across market channels, defined as direct-to-consumer only sales, intermediated sales, and a combination of direct-to-consumer and intermediated sales. Rather, the results show that scale is the primary predictor of Federal crop insurance expenditure; larger operations are more likely to have nonzero Federal crop insurance expenses.Originality/valueThis article provides the first national research to document descriptive statistics of the utilization of Federal crop insurance by US farms and ranches that utilize local food market channels.
{"title":"The role of Federal crop insurance for farms and ranches that sell through local food markets","authors":"B. Jablonski, J. Hadrich, Allison Bauman","doi":"10.1108/AFR-12-2020-0178","DOIUrl":"https://doi.org/10.1108/AFR-12-2020-0178","url":null,"abstract":"PurposeThe Agriculture Improvement Act of 2018 directed the United States Department of Agriculture (USDA) Risk Management Association to investigate a policy targeted to farms and ranches that sell through local food markets. However, there is no available research that quantitatively documents the extent to which local food producers utilize Federal crop insurance.Design/methodology/approachThe authors utilize 2013–2016 USDA Agricultural Resource Management Survey data to compare farms and ranches with sales through local food markets to those with and without Federal crop insurance expenditure, as well as the distribution of Federal crop expenditure, across market channels and scales.FindingsThere is a little variation in Federal crop insurance expenditure across market channels, defined as direct-to-consumer only sales, intermediated sales, and a combination of direct-to-consumer and intermediated sales. Rather, the results show that scale is the primary predictor of Federal crop insurance expenditure; larger operations are more likely to have nonzero Federal crop insurance expenses.Originality/valueThis article provides the first national research to document descriptive statistics of the utilization of Federal crop insurance by US farms and ranches that utilize local food market channels.","PeriodicalId":46748,"journal":{"name":"Agricultural Finance Review","volume":" ","pages":""},"PeriodicalIF":1.6,"publicationDate":"2021-05-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49561277","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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