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Financial Resilience of Young and Beginning Farmers under Recession: A Transition Probability Approach

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  • Hofner D. Rusiana
  • Cesar L. Escalante
  • Brady E. Brewer

Abstract

This paper examines the relative financial strength and endurance of several paired classes of farmers according to business maturity (beginning versus mature farm businesses) and farm operators’ age and experience (young versus older, more experienced farm operators) by utilizing transition probability approach. Results show that the financial stress resulting from the late 2000s recession did not significantly influence the financial vitality of farms in general, regardless of the farm type. The financial strength of farms operated by young farm operators and beginning farms during the recessionary period remained at favorable levels, although their performances were lower than their counterparts.  JEL classification numbers: Q10, Q12, Q14.

Suggested Citation

  • Hofner D. Rusiana & Cesar L. Escalante & Brady E. Brewer, 2024. "Financial Resilience of Young and Beginning Farmers under Recession: A Transition Probability Approach," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 14(3), pages 1-5.
    • Handle: RePEc:spt:apfiba:v:14:y:2024:i:3:f:14_3_5
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    References listed on IDEAS

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    1. Peter J. Barry & Cesar L. Escalante & Paul N. Ellinger, 2002. "Credit risk migration analysis of farm businesses," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 62(1), pages 1-11, May.
    2. Til Schuermann & Yusuf Jafry, 2003. "Measurement and Estimation of Credit Migration Matrices," Center for Financial Institutions Working Papers 03-08, Wharton School Center for Financial Institutions, University of Pennsylvania.
    3. Jill M. Phillips & Ani L. Katchova, 2004. "Credit score migration analysis of farm businesses: conditioning on business cycles and migration trends," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 64(1), pages 1-15, May.
    4. Cesar L. Escalante & Peter J. Barry & Timothy A. Park & Ebru Demir, 2004. "Farm‐level and macroeconomic determinants of farm credit risk migration rates," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 64(2), pages 135-149, November.
    5. Maria Akers & Jason Henderson, 2010. "Financial challenges facing farm enterprises," Main Street Economist, Federal Reserve Bank of Kansas City, issue 1.
    6. Kauffman, Nathan S., 2013. "Credit Markets and Land Ownership for Young and Beginning Farmers," Choices: The Magazine of Food, Farm, and Resource Issues, Agricultural and Applied Economics Association, vol. 28(2), pages 1-5.
    7. Betty Joyce Nash & Kimberly Zeuli, 2011. "Small business lending during the recession," Richmond Fed Economic Brief, Federal Reserve Bank of Richmond, issue Feb.
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    More about this item

    Keywords

    Transition probability; Recession; Agriculture; Credit migration; Agricultural finance.;
    All these keywords.

    JEL classification:

    • Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance

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