The role of financing frictions in agricultural investment decisions: an analysis pre and post financial crisis

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dc.creatorO'Toole, Conor M.
dc.creatorNewman, Carol F.
dc.creatorHennessy, Thia C.
dc.date2017-04-01T20:21:49Z
dc.date.accessioned2026-07-09T05:45:22Z
dc.descriptionThis paper uses a fundamental Q model of investment to consider the role played by financing frictions in agricultural investment decisions, controlling econometrically for censoring, heterogeneity and errors-in-variables. Our findings suggest that farmer's investment decisions are not driven by market fundamentals. We find some evidence that debt overhang restricts investment but investment is not dependent on liquidity or internal funds. The role of financing frictions in determining investment decisions changes in the post-financial crisis period when debt overhang becomes a significant impediment to farm investment. The evidence suggests that farmers increasingly rely on internal liquidity to drive investment. Finally, we find no evidence that farmers use on-farm capital to fund on-farm investment.
dc.identifierdoi:10.22004/ag.econ.114568
dc.identifierhttps://ageconsearch.umn.edu/record/114568/files/O_Toole_Conor_146.pdf
dc.identifierhttp://ageconsearch.umn.edu/record/114568
dc.identifier.urihttp://hdl.handle.net/123456789/567902
dc.languageeng
dc.publisher
dc.sourcehttp://ageconsearch.umn.edu/record/114568
dc.titleThe role of financing frictions in agricultural investment decisions: an analysis pre and post financial crisis
dc.typeText

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