The cooperative capital constraint revisitedAgricultural Finance Review
Publication VersionAccepted Manuscript
AbstractPurpose – There is little reason a priori to expect that a cooperative firm’s capital needs are different from a non-cooperative firm’s needs if the two firms are otherwise similar in function and size and operate within similar market economies. However, the notion that cooperatives face capital constraints that investor-owned firms (IOFs) do not is a persistent theme in the literature. The paper aims to discuss these issues. Design/methodology/approach – The authors revisit this hypothesis with an empirical examination of capital constraints in a panel data set of US agricultural supply and grain cooperatives and IOFs. Findings – The findings are mixed. While the authors find little to suggest that cooperatives face financial constraints on borrowing in the short run, relative to IOFs, the authors do find some evidence that for long-term investments, a capital constraint may exist. Originality/value – These short and long run differences have implications for the survival and growth of agricultural cooperatives. While in the short run, access to debt financing allows these firms to operative profitably, ultimately long-term large investments in technology and fixed assets will be required to maintain competitiveness in this industry.
Copyright OwnerEmerald Group Publishing Limited
Citation InformationZiran Li, Keri L. Jacobs and Georgeanne M. Artz. "The cooperative capital constraint revisited" Agricultural Finance Review Vol. 75 Iss. 2 (2015) p. 253 - 266
Available at: http://works.bepress.com/georgeanne-artz/11/