A Split-Population Duration Approach to Understanding Agricultural Banking Survival Strategies during the Late 2000s Recession

Xiaofei Li, Cesar Escalante () and James Epperson

No 169744, 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota from Agricultural and Applied Economics Association

Abstract: This paper is designed to identify predictors of eventual bank failure as well as factors that could enhance the survival ability of agricultural and non-agricultural banks. This study utilizes a split-population survival model that addresses two shortcomings of the basic duration model. First, this model departs from the restrictive assumption of the traditional model that all bank observations in the sample would eventually fail. Second, this model provides for a clear distinction between the determinants of the probability of failure and factors influencing the timing of the failure. The results of this study suggest that failure to allow for a split population among sample banks represents an important misspecification with serious implications in identifying the determinants of the timing of bank failure, more than just the probability of failure.

Keywords: Agricultural; Finance (search for similar items in EconPapers)
Pages: 25
Date: 2014
New Economics Papers: this item is included in nep-ban
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea14:169744

DOI: 10.22004/ag.econ.169744

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