Fundamental q, Cash Flow, and Investment: Evidence from Farm Panel Data

Abstract

This study used a 1976-1992 panel data set to test whether farm machinery investors face finance constraints. Tests were based on fundamental q investment equations in which cash flow was added as an additional explanatory variable. Results indicated that (1) credit constraints were generally not a problem during the 1970s boom, (2) credit constraints became a problem during the 1980s and early 1990s because of tighter credit and/or more conservative financial managerial styles, (3) the investment-cash flow relationships of low-debt and older-operator farms were not significantly affected by farm business cycles, and (4) the investment-cash flow relationships of high-debt and young-operator farms were affected strongly by business cycles. Debt level was the strongest determinant of credit constraints; asset size and operator age were less important. © 1998 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

Does bank market power affect SME financing constraints?

“…An important consideration in using this model is the selection of the appropriate variables for this vector. In line with other studies such as Benjamin and Phimister (2002) and Bierlen and Featherstone (1998) we include the marginal value product of capital (mvpk) and the sales to capital ratio. The mvpk is defined as in Gilchrist and Himmelberg (1995) as the profit to capital ratio and captures the increments to profitability of an additional unit of capital.…”

Short communication: East-West European farm investment behaviour - The role of financial constraints and public support

“…There is a wealth of research on farm investment (e.g., Bierlen & Featherstone, 1998;Benjamin & Phimister, 2002;Petrick, 2004a,b;Latruffe, 2005;Bakucs et al, 2009;Bokusheva et al, 2009;Zynch & Odening, 2009;Latruffe et al, 2010;Hüttel et al, 2010;Bojnec & Latruffe, 2011;Kallas et al, 2012). However, studies dealing with agriculture are generally limited to one country and exclude cross-country comparisons, except for Benjamin & Phimister (2002), who compared France and the United Kingdom.…”

Illiquid Capital: Are Conservation Easement Payments Reinvested in Farms?

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