Financing of permanent working capital in agriculture

PurposeThe study assesses the relationship between institutional credit access and farmer satisfaction using contextual mediating and moderating variables. This study identifies various socioeconomic, service features and service quality determinants impacting institutional credit access.Design/methodology/approachThe authors used the stratified random sampling method and selected 512 farmers from 40 villages in Maharashtra, India. Initially, the study employed probit regression analysis to identify the credit adoption determinants. Subsequently, the relationship between institutional credit and farmer satisfaction is identified through moderated-mediation analysis using the Statistical Package for the Social Sciences and Analysis of a Moment Structures (SPSS - AMOS model).FindingsProbit model's results suggest that socioeconomic variables like education and bank distance; service quality variables like prompt service and employee behavior; and service characteristics variables like the interest rate, loan sanction time, repayment period, and documents for loan application significantly affect institutional credit adoption across the smallholders. Subsequently, the results of the moderating-mediation analysis show that working capital, perceived value and risk perception partially mediate the association between credit adoption and farmer satisfaction. The mediated effects are further moderated by farm advisory services and financial knowledge and skills.Research limitations/implicationsThe study is restricted in opportunity due to primary data, and it considers only farmers' perspectives to measure service quality and service features as constraints for institutional credit access.Practical implicationsThe government, nongovernment organizations, civil societies and private institutions should provide sufficient financial knowledge and training to the farmers via extension services to utilize the borrowed capital effectively to bring economic welfare and mental satisfaction.Originality/valueThe existing literature rarely considered banking service quality and service features (demand side) variables as determinants of credit access. Further, the study brings novelty in examining how the capital management cognitive factors of the formal credit adopters influence the relationship between credit access and satisfaction.

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“…, 2010). Vučković et al. (2017) identified that working capital financing assists continuous output and enables profitable agribusiness.…”

Section: Literature Reviewmentioning

confidence: 99%

Determinants of institutional agricultural credit access and its linkage with farmer satisfaction in India: a moderated-mediation analysis

Dey

Singh

Mhaskar

2022

AFR

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“…the ability to generate sufficient cash flow to pay its expenses as they come due in the near term) (Gunderson et al, 2014). Inefficient working capital and a lack of liquidity have often been cited as the main reasons for small business closure, and their proper management is considered a key factor in survival and progress (Ekanem, 2010;Mead and Liedholm, 1998;Vuckovic, Veselinovic and Drobnjakovic, 2017). Properly managing working capital is critical in Senegal, given the high operational costs that manufacturers here incur, as discussed in the Operations section.…”

Section: Working Capitalmentioning

confidence: 99%

The role of small and medium agrifood enterprises in food systems transformation: the case of rice processors in Senegal

2021

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The designations employed and the presentation of material in this information product do not imply the expression of any opinion whatsoever on the part of the Food and Agriculture Organization of the United Nations (FAO) concerning the legal or development status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. Dashed lines on maps represent approximate border lines for which there may not yet be full agreement. The mention of specific companies or products of manufacturers, whether or not these have been patented, does not imply that these have been endorsed or recommended by FAO in preference to others of a similar nature that are not mentioned.The views expressed in this information product are those of the author(s) and do not necessarily reflect the views or policies of FAO.

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“…(2) Industry characteristics affect firm's working capital financing. For example, agricultural and ocean transport firms with high risk of natural disasters choose more long-term debt or equity financing (Weinraub & Visscher, 1998;Vučković et al, 2017; Oil and gas field companies tend to have more conservative financing (Rajak, 2022). (3) How macro factors affect working capital financing.…”

Section: Introductionmentioning

confidence: 99%

Does Working Capital Financing Structure Affect Firm Value? --- An Empirical Research Based on Data of China’s A-Share Listed Companies

Wang¹,

Zhou²

2022

IJEF

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In this paper, we use financial data of Chinese listed companies from 2010 to 2020 to explore the relation between working capital financing structure and firm value under certain monetary policy and macro economy situation. We find that when monetary policy expands, the use of aggressive working capital financing structure is conducive to value maximization; when the macroeconomic situation is good, the aggressive working capital financing structure helps to improve firm value. Further study finds that monetary policy expansion urges firms to use more short-term debt to cut capital cost, and better macroeconomic situation can cut firm’s bankrupt cost to bring down working capital financing structure and improve firm value.

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Financing of permanent working capital in agriculture

Abstract: SummaryIn this paper, we

Cited by 9 publications

References 7 publications

Determinants of institutional agricultural credit access and its linkage with farmer satisfaction in India: a moderated-mediation analysis

Determinants of institutional agricultural credit access and its linkage with farmer satisfaction in India: a moderated-mediation analysis

The role of small and medium agrifood enterprises in food systems transformation: the case of rice processors in Senegal

Does Working Capital Financing Structure Affect Firm Value? --- An Empirical Research Based on Data of China’s A-Share Listed Companies

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