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Measuring efficiency of the Farm Credit System

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  • Dang, Trang
  • Leatham, David J.
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    Abstract

    The paper measures the U.S. Farm Credit System’s technical efficiency from 2000 to 2009 using a stochastic frontier production function model with quarterly unbalanced panel data. The paper's results suggest that the FCS has not efficiently utilized their inputs. On an average, the system realizes only 9.7% of their technical abilities in raising their loans, leases and investment. The efficiency of the whole system is estimated to slightly increase over time even during financial crisis period from 2007. Among the system, a significant difference in efficiency between the 5 Banks and the Associations has been found. On average, the Banks have higher technical efficiency of 62.4% compared to that of 7.7% of the associations. The efficiency of the latter increases by a small rate over time during 2004-2009 periods while efficiency of the former is more time-varying and experiences the opposite pattern. No evidence about the impact of financial crisis on the system efficiency was found.

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    File URL: http://purl.umn.edu/104006
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    Bibliographic Info

    Paper provided by Agricultural and Applied Economics Association in its series 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania with number 104006.

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    Date of creation: 2011
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    Handle: RePEc:ags:aaea11:104006

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    Related research

    Keywords: Farm Credit System; agricultural lenders; technical efficiency; financial crisis; stochastic frontier production function; financial reform; Agricultural Finance;

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    1. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
    2. Abhiman Das & K. R. Sanmugam, 2004. "Efficiency of Indian commercial banks during the reform period," Industrial Organization 0410005, EconWPA.
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