Agricultural Finance Review: Volume 62 Issue 1

Credit risk migration analysis of farm businesses

Peter J. Barry, Cesar L. Escalante, Paul N. Ellinger

The migration approach to credit risk measurement is based on historic rates of movements of individual loans among the classes of a lender’s risk‐rating or credit‐scoring system…

External equity in agriculture: Risk sharing and incentives in a principal‐agent relationship

Zijun Wang, David J. Leatham, Thanapat Chaisantikulawat

The moral hazard problem which obstructs external equity financing of farm businesses is studied using the principal‐agent framework. We assume that the supplier of external…

Modeling agricultural loan portfolio risk in a stochastic environment

Richard L. Gallagher

A simulation methodology is applied to the loan loss reserve process of an agricultural lender. Weaknesses of the point‐estimate approach to estimating loan loss reserves are…

Hedging financial and business risks in agriculture with commodity‐linked loans

Yufei Jin, Calum G. Turvey

One of the particular problems facing agribusiness firms is the relationship between commodity price risk (a source of business risk) and debt repayment ability (a source of…

Estimating risk‐adjusted interest rates for dairy farms

Loren Tauer

The Capital Asset Pricing Model (CAPM) is used to estimate the cost of equity for each of 62 New York dairy farms that participated in a business analysis program from 1988…

Business growth strategies of Illinois grain farms

Cesar L. Escalante, Peter J. Barry

This study identifies key strategies employed by Illinois grain farms to prevent the erosion of their equity positions due to significant downturns in commodity prices during the…