Farm Capital Structure Choice under Credit Constraint: Theory and Application

Feng Wu and Zhengfei Guan

No 6130, 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: This study proposed a theoretical framework for analyzing farm capital structure choice. The theoretical model recognizes that the costs of debt are endogenously determined which in turn reflect the degree of credit constraint faced by individual borrowers. Based on the proposed model, we derived the impacts of different determinants on capital structure choice analytically. The theoretical inferences are further tested with empirical data. Methodologically, we proposed a fixed-effect quantile regression procedure to estimate the impacts of determinants at different ranges of leverage. The effects of determinants are discussed in the empirical application.

Keywords: Agricultural; Finance (search for similar items in EconPapers)
Pages: 27
Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea08:6130

DOI: 10.22004/ag.econ.6130

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