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Predicting Financial Stress in Farm Businesses

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  • Franks, Jeremy R

Abstract

This study uses a multinomial logit (MNL) model to examine financial strategies which may influence the likelihood of a farm becoming financially stressed in the next year. The model is operationalised by categorizing farms into one of three financial stress categories and accompanied by a comprehensive range of specification tests. The MNL model highlights the importance of industry and farm-specific factors on the incidence of financial stress. The model confirms the importance of increasing returns to equity as a strategy for reducing the likelihood of being classified as financially stressed. Copyright 1998 by Oxford University Press.

Suggested Citation

  • Franks, Jeremy R, 1998. "Predicting Financial Stress in Farm Businesses," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 25(1), pages 30-52.
    • Handle: RePEc:oup:erevae:v:25:y:1998:i:1:p:30-52
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    Cited by:

    1. Belen Iraizoz & Sophia Davidova & Matthew Gorton, 2003. "Cosmetic or Cutting? The impact of the modulation of EU direct payments on farm profitability in the Navarra region of Spain," Others 0310002, University Library of Munich, Germany.
    2. Florence A. Becot & Shoshanah M. Inwood, 2022. "Medical economic vulnerability: a next step in expanding the farm resilience scholarship," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 39(3), pages 1097-1116, September.
    3. Vaida Stulpinienė & Vida Čiulevičienė, 2014. "Agricultural Support Influence On Farm Financial Stability," Economy & Business Journal, International Scientific Publications, Bulgaria, vol. 8(1), pages 936-946.
    4. D'Antoni, Jeremy M. & Mishra, Ashok K. & Chintawar, Sachin, 2009. "Predicting Financial Stress in Young and Beginning Farmers in the United States," 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia 46861, Southern Agricultural Economics Association.
    5. Geoffroy Enjolras & Philippe Madiès, 2020. "The role of bank analysts and scores in the prediction of financial distress: Evidence from French farms," Economics Bulletin, AccessEcon, vol. 40(4), pages 2978-2993.
    6. Matthew Gorton & Barna Kovacs & Tamas Mizik & Sophia Davidova & Tomas Ratinger & Belen Iraizoz, 2003. "An Analysis of the Performance of Commercially Oriented Farms in Hungary," Post-Communist Economies, Taylor & Francis Journals, vol. 15(3), pages 401-416.
    7. Iraizoz, Belen & Gorton, Matthew & Davidova, Sophia, 2007. "Segmenting farms for analysing agricultural trajectories: A case study of the Navarra region in Spain," Agricultural Systems, Elsevier, vol. 93(1-3), pages 143-169, March.

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