AN ANALYSIS OF TWO ALTERNATIVE FUNDING SOURCES FOR NORTHEAST BANKS LENDING TO AGRICULTURE

Kenneth C. Carraro and Eddy L. LaDue

Northeastern Journal of Agricultural and Resource Economics, vol. 14, issue 01, 10

Abstract: A survey of agricultural banks in New York State found that inability to compete with the low interest rates offered by the Farm Credit Service (FCS) rather than the unavailability of funds per se was limiting agricultural lending by commercial banks. A MASI-like intermediary would (1) be of assistance only to banks unable to use loan participations and with high CD costs and (2) would likely require a large multistate area to be feasible. Only eight percent of the New York banks serving agriculture qualify for FICB funding. Further, FICB funding would be profitable only if banks experienced illiquidity at least 50 percent of the time.

Keywords: Agricultural Finance; Resource/Energy Economics and Policy (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:nejare:28933

DOI: 10.22004/ag.econ.28933

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