Why do Agricultural Credit Cooperatives Merge? The Portuguese Experience
AbstractOver the last decade, increasing financial problems in the Portuguese Agricultural Credit Cooperatives (ACCs), mainly difficulty in gathering equity, have forced them to pursue an intensive merger activity. This paper describes the economic reasons that have led the ACCs to merge, and analyses the ex post merger impact on their economic performance. The results show that: (a) incorporating ACCs are larger, more profitable and hold a better credit management; (b) incorporated ACCs are smaller, face difficulties in reaching a minimum efficient scale and have weaker credit management as well as leverage problems; and (c) merged ACCs have a heavy administrative cost structure and also face profitability problems. Regarding the mergers' ex post impact on the ACCs performance, we find no positive influence on cost reduction, credit management and solvency ratio. Copyright CIRIEC, 2005.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Annals of Public & Cooperative Economics.
Volume (Year): 76 (2005)
Issue (Month): 3 (09)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=1370-4788
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- Cabo, Paula & Rebelo, Joao, 2005. "Governance Control Mechanisms in Portuguese Agricultural Credit Cooperatives," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark, European Association of Agricultural Economists 24623, European Association of Agricultural Economists.
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