Search results

1 – 10 of over 15000
To view the access options for this content please click here
Article
Publication date: 1 December 2020

Calum G. Turvey, Amy Carduner and Jennifer Ifft

The purpose of this paper is to investigate the market microstructure related to the Farm Credit System (FCS), Commercial Banks (CB) and Farm Services Administration…

Abstract

Purpose

The purpose of this paper is to investigate the market microstructure related to the Farm Credit System (FCS), Commercial Banks (CB) and Farm Services Administration (FSA). The commercial banks frequently call out the FCS as having an unfair advantage in the agricultural finance market place due to tax exempt bonds, and an implied guarantee of those bonds. This paper addresses the issue by examining the interrelationships since 1939, while addressing the historically distinctive roles that the FCS, CB and FSA have played in the US agricultural credit market.

Design/methodology/approach

There are two components to our model. The first is the estimation of short and long run credit demand elasticities, as well as land elasticities. These are estimated from a dynamic duality model using seemingly unrelated regression. The point elasticity measures are then used as independent variables in least square regressions, combined with farm specific and related macro variables, for the Cornbelt states. The dependent variable is the year-over-year changes in paired FCS, CB and FSA loans.

Findings

The genesis of the FCS was to provide credit to farmers in good and bad years. Therefore, we expected to see a countercyclical relationship between FCS and CB. This is found for the farm crisis years in the 1980s but is not a continuous characteristic of FCS lending. In good times the FCS and CB appear to compete, albeit with differentiated market segmentation into short- and long-term credit. The FSA, which was established to provide tertiary support to both the FCS and CB, appears to be responding as designed, with greater activity in bad years. The authors find the elasticity measures to be economically significant.

Research limitations/implications

The authors conclude that the market microstructure of the agricultural credit market in the US is important. Our analysis applies a broader definition of market microstructure for institutions and intermediaries and reveals that further research examining the economic frictions caused by comparative bond vs deposit funding of agricultural credit is important.

Originality/value

The authors believe that this is the first paper to examine agricultural finance through the market microstructure lens. In addition our long-term data measures allow us to examine the economics through various sub-periods. Finally, we believe that our introduction of credit and land demand elasticities into a comparative credit model is also a first.

Details

Agricultural Finance Review, vol. 81 no. 3
Type: Research Article
ISSN: 0002-1466

Keywords

To view the access options for this content please click here
Article
Publication date: 29 April 2014

Charles Dodson

An established paradigm in small business lending is segmented by bank size with large banks more likely to lend to large informationally transparent firms while small…

Abstract

Purpose

An established paradigm in small business lending is segmented by bank size with large banks more likely to lend to large informationally transparent firms while small banks are more likely to lend to small informationally opaque firms. In light of banking consolidation, this market segmentation can have implications for credit availability. Federal loan guarantees, such as those provided by USDA's Farm Service Agency (FSA) may reduce the risks of lending to informationally opaque firms thereby mitigating the impacts of the bank size lending paradigm. This paper aims to discuss these issues.

Design/methodology/approach

This analysis utilized a binomial logit procedure to determine if there was any empirical evidence that smaller community banks served a unique clientele of farmers when making FSA-guaranteed loans. The analysis relied on a unique data set which incorporated detailed data on farm businesses receiving FSA-guaranteed loans, loan characteristics, as well as information about the originating bank and characteristics of the local credit markets.

Findings

Results were consistent with the bank size lending paradigm with smaller banks being less likely to engage in fixed-asset lending, and more likely to serve a riskier and less established clientele when making guaranteed loans.

Research limitations/implications

Data limitations did not permit detailed analysis of banks larger than $250 million in total assets nor for consideration of non-bank lenders. An expansion by these lender groups into serving more informationally opaque borrowers could mitigate any adverse impacts arising from fewer small community banks.

Practical implications

The results suggested that Federal guarantees do not completely eliminate the relative informational advantages of large and small size banks. And, continued bank consolidation, such that there are fewer small community banks, could result in less credit availability among smaller, less creditworthy farm businesses.

Social implications

While FSA guarantees may not enhance a large banks propensity to serve informationally opaque farm borrowers, they may enhance the ability of smaller community banks to serve groups specifically targeted through FSA lending programs; the provision of credit to family farmers who, despite being creditworthy, are unable to obtain credit at reasonable rates and terms.

Originality/value

The analysis examines relationship between bank size and the use of FSA guarantees using a unique data set which incorporated information on FSA-guaranteed loans, farm financial characteristics, along with characteristics of commercial banks which participated in the FSA-guarantee program.

Details

Agricultural Finance Review, vol. 74 no. 1
Type: Research Article
ISSN: 0002-1466

Keywords

To view the access options for this content please click here
Article
Publication date: 2 September 2019

Michelle Maloba and Abdul Latif Alhassan

The purpose of this paper is to examine the factors that influence financial institutions’ lending to the agricultural sector in Kenya.

Abstract

Purpose

The purpose of this paper is to examine the factors that influence financial institutions’ lending to the agricultural sector in Kenya.

Design/methodology/approach

The paper employs a panel data of 15 licensed financial institutions (commercial banks and deposit-taking microfinance institutions) from 2011 to 2016. The random effects and ordinary least squares panel corrected standard errors estimation techniques are employed to estimate the effect of liquidity, size, equity, lending rate (LR), type of financial institution and non-performing loans on agri-lending.

Findings

The results indicate that only 3.9 per cent of loan portfolio of the sampled financial institutions were advanced to the agricultural sector over the study period. From the panel regression analysis, the paper finds agricultural credit risk to reduce lending to the agricultural sector while size, LR and type of financial institution were observed to significantly increase agricultural lending. Compared to 2011, agri-lending was also observed to have declined between 2012 and 2015.

Practical implications

The findings highlight important indicators for enhancing lending to the agricultural sector in Kenya and other emerging economies.

Originality/value

As far as the authors are concerned, this presents the first empirical evidence on the determinants of agri-lending by financial institutions in Kenya.

Details

Agricultural Finance Review, vol. 79 no. 5
Type: Research Article
ISSN: 0002-1466

Keywords

To view the access options for this content please click here
Article
Publication date: 25 October 2011

Neil Crosby and Cathy Hughes

In the context of the financial crash and the commercial property market downturn, the purpose of this paper is to examine the basis of valuation used in the UK commercial

Abstract

Purpose

In the context of the financial crash and the commercial property market downturn, the purpose of this paper is to examine the basis of valuation used in the UK commercial property lending process. Post‐crisis there is discussion of countercyclical measures, including the monitoring of asset prices; however there is no consideration of a different approach to property valuation. This paper questions this omission, given the role that valuations play in the bank regulatory process.

Design/methodology/approach

The different bases of valuation available to lenders within international valuation standards are identified as market value (MV), mortgage lending value (MLV) and investment value (IV), with MV being the most used in the UK. Using the different bases in the period before the financial crisis, the UK property market is modelled at a national office, retail and industrial/warehouse sector level to determine the performance of each alternative valuation basis within the context of countercyclical pressures on lending.

Findings

Both MLV and IV would have produced lower valuations than MV, although there are some practical issues involved in adopting the different bases for the bank lending.

Originality/value

The use of a different valuation basis could provide lenders with tools for more informed and prudent lending.

Details

Journal of European Real Estate Research, vol. 4 no. 3
Type: Research Article
ISSN: 1753-9269

Keywords

To view the access options for this content please click here
Article
Publication date: 14 June 2019

Tanu Aggarwal and Priya Solomon

The purpose of this paper is to examine the impact of residential and commercial loans on total real estate sector loans by using partial least square–structured equation…

Abstract

Purpose

The purpose of this paper is to examine the impact of residential and commercial loans on total real estate sector loans by using partial least square–structured equation modelling (PL–SEM) method. The residential loans as a mediator have been used to know the mediation effect between commercial and total real estate loans of banks in India. The residential loans as a mediator govern the relationship between commercial loans and total real estate loans in India. Real estate sector development is a lucrative opportunity for India. The real estate sector plays a major role in shaping economic conditions of the individuals, firms and family.

Design/methodology/approach

The research is descriptive in nature. The study on residential loans, commercial loans and total real estate loans has been taken into consideration, and on the other hand the measurement and structural model have been employed to the study the impact of residential loans and commercial loans on total real estate loans in India by using PL–SEM. The residential loans as a mediator have been taken to study the mediation effect of the relationship between commercial loans and total real estate loans in India.

Findings

The outcome of the structural model that is bootstrapping technique shows that there is an impact of residential and commercial loans by public and private sector banks on total real estate sector development in India. The residential loans show the full mediation effect between commercial loans and total real estate loans as the value of variation accounted for (VAF) is more than 1.93 which shows residential loans govern the nature of variable between commercial loans and total real estate loans.

Practical implications

The public and private sector banks are contributing to the real estate sector development in India which increases the economic growth of the country. The mediation analysis shows that residential loans are an important aspect between commercial and total real estate loans in India as the demand for residential housing is more in India. The increasing role of banks in the real estate sector strengthens the financial capability in the real estate sector market, and the property buyers will able to purchase more property which leads to increasing demand for real estate sector.

Originality/value

The research paper is original, and PL–SEM has been used to find the results.

Details

Journal of Property Investment & Finance, vol. 37 no. 5
Type: Research Article
ISSN: 1463-578X

Keywords

To view the access options for this content please click here
Article
Publication date: 1 March 2001

K.G.B. Bakewell

Compiled by K.G.B. Bakewell covering the following journals published by MCB University Press: Facilities Volumes 8‐18; Journal of Property Investment & Finance Volumes…

Abstract

Compiled by K.G.B. Bakewell covering the following journals published by MCB University Press: Facilities Volumes 8‐18; Journal of Property Investment & Finance Volumes 8‐18; Property Management Volumes 8‐18; Structural Survey Volumes 8‐18.

Details

Structural Survey, vol. 19 no. 3
Type: Research Article
ISSN: 0263-080X

To view the access options for this content please click here
Article
Publication date: 1 September 2001

Index by subjects, compiled by K.G.B. Bakewell covering the following journals: Facilities Volumes 8‐18; Journal of Property Investment & Finance Volumes 8‐18; Property…

Abstract

Index by subjects, compiled by K.G.B. Bakewell covering the following journals: Facilities Volumes 8‐18; Journal of Property Investment & Finance Volumes 8‐18; Property Management Volumes 8‐18; Structural Survey Volumes 8‐18.

Details

Facilities, vol. 19 no. 9
Type: Research Article
ISSN: 0263-2772

To view the access options for this content please click here
Article
Publication date: 1 March 2001

K.G.B. Bakewell

Compiled by K.G.B. Bakewell covering the following journals published by MCB University Press: Facilities Volumes 8‐18; Journal of Property Investment & Finance Volumes…

Abstract

Compiled by K.G.B. Bakewell covering the following journals published by MCB University Press: Facilities Volumes 8‐18; Journal of Property Investment & Finance Volumes 8‐18; Property Management Volumes 8‐18; Structural Survey Volumes 8‐18.

Details

Property Management, vol. 19 no. 3
Type: Research Article
ISSN: 0263-7472

To view the access options for this content please click here
Article
Publication date: 1 May 2001

K.G.B. Bakewell

Compiled by K.G.B. Bakewell covering the following journals published by MCB University Press: Facilities Volumes 8‐18; Journal of Property Investment & Finance Volumes…

Abstract

Compiled by K.G.B. Bakewell covering the following journals published by MCB University Press: Facilities Volumes 8‐18; Journal of Property Investment & Finance Volumes 8‐18; Property Management Volumes 8‐18; Structural Survey Volumes 8‐18.

Details

Journal of Property Investment & Finance, vol. 19 no. 5
Type: Research Article
ISSN: 1463-578X

To view the access options for this content please click here
Article
Publication date: 12 October 2015

Delpachitra Sarath and Dai Van Pham

– The purpose of this paper is to theoretically and empirically examine the lending behavior of Vietnamese banks.

Abstract

Purpose

The purpose of this paper is to theoretically and empirically examine the lending behavior of Vietnamese banks.

Design/methodology/approach

A firm-banking model was established, considering risk-taking behavior and the regulatory environment. Based on the theoretical model, a simultaneous equation system was specified that considered loan growth and deposit growth as endogenous variables to empirically investigate lending behavior in Vietnam’s banking sector. Two-stage least square estimators were employed using a micro-level panel data set comprising 39 Vietnamese commercial banks.

Findings

The empirical results demonstrate the divergence in the lending behavior of private and state-owned banks. The regressions results support the predictions of the theoretical model on the positive effect of economic growth and the negative effect of the government bond rate on bank lending. The results also suggest that deposit growth and liquidity constraint significantly influence loan supply in private banks, while equity growth is the determinant of lending behavior in state-owned banks. Nevertheless, the banks’ non-performing loan rate, which proxies for the expected default probability of loans, is found to not significantly affect loan supply.

Research limitations/implications

Despite the efforts to capture the idiosyncratic characteristics of the Vietnamese banking system, this study does not fully take into account distinctive nature of the Vietnamese banking system.

Practical implications

The paper suggests implications for the government monetary policy.

Originality/value

The contribution of this paper is twofold. First, it introduces a firm-banking theoretical model that allows banks offering different lending rates and modeled under different aspects of modern banking such as risk-taking behavior and regulatory environment. Second, it is a very first study empirically investigating the lending behavior of Vietnamese banks.

Details

Journal of Economic Studies, vol. 42 no. 5
Type: Research Article
ISSN: 0144-3585

Keywords

1 – 10 of over 15000