The impact of banking and external sectors on Mexican agriculture in the period 1995-2015

Guillermo Benavides-Perales, Isela Elizabeth Tellez-Leon and Francisco Venegas-Martinez
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Guillermo Benavides-Perales: Tecnológico de Monterrey, EGADE Business School, Mexico City, Mexico
Isela Elizabeth Tellez-Leon: Instituto Politécnico Nacional, Escuela Superior de Economía, Mexico City, Mexico
Francisco Venegas-Martinez: Instituto Politécnico Nacional, Escuela Superior de Economía, Mexico City, Mexico

Agricultural Economics, 2018, vol. 64, issue 1, 36-49

Abstract: Mexican agricultural production has been characterised by a lack of dynamism in recent years and is losing ground in terms of GDP. This may reflect the lack of funding from commercial and development banks. This research aims at studying the dynamics of the agriculture sector through econometric analysis using Vector Autoregressive (VAR) and Vector Error Correction (VEC) models in order to examine the short- and long-run relationships among agricultural production, terms of trade (ratio of agricultural prices and general price level), agricultural exports and lending from commercial and development banks. The main empirical findings, contrary to what was expected, is that even though there was a precarious level of funding from the banking sector, credit from commercial banking was higher than that from development banking in the last decades. Further, relative prices were found to have a negative relationship with agricultural exports, showing the importance of the external sector in agriculture.

Keywords: agricultural financing; agricultural policy; econometric modelling (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:caa:jnlage:v:64:y:2018:i:1:id:193-2016-agricecon

DOI: 10.17221/193/2016-AGRICECON

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