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Performance Indicators in Agricultural Financial Markets

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  • Hedman Jansson, Kristina
  • Lagerqvist, Carl Johan
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    Abstract

    This study attempts to develop performance indicators for the financial markets based on the findings in an earlier Factor Markets Working Paper (No. 33, “Agricultural credit market institutions: A comparison of selected European countries”) and on FADN (Farm Accountancy Data Network) data. Two indicators were developed. One measured the long-term economic sustainability of agriculturalfirms since the financial characteristics of the firms were perceived as important factors when rejecting a loan applicant. If the indicator works, it should show that a low value in this indicator is related to the performance in the financial markets. The second indicator was the loan-to-value (LTV), or debtto-asset ratio, the reasoning behind this indicator is that low values can point to credit constraints, and in WP 33 we saw that the interviewed experts expected LTVs to be much higher than what is actually the case. We find that the first indicator can’t be used to measure the performance of the financial institutions, since we can’t show any relationship between the indicator and activities in the financial markets. However, the indicator is valuable for its measurement of the long-term financial sustainability of the agricultural sector, or of the firms. The loan-to-value indicator does imply that most countries would have room to increase the credit.

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    File URL: http://www.factormarkets.eu/system/files/FM%20WP43%20Performance%20Indicators%20of%20Ag%20Financial%20Mkts.pdf
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    Bibliographic Info

    Paper provided by Centre for European Policy Studies in its series Factor Markets Working Papers with number 155.

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    Length: 30 pages
    Date of creation: Jun 2013
    Date of revision:
    Handle: RePEc:eps:fmwppr:155

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    1. Ciaian, Pavel & Kancs, d'Artis & Swinnen, Johan F.M. & Van Herck, Kristine & Vranken, Liesbet, 2012. "Key Issues and Developments in Farmland Sales Markets in the EU Member States and Candidate Countries," Working Papers 120247, Factor Markets, Centre for European Policy Studies.
    2. Hedman Jansson, Kristina & Huisman Chelsey, Jo & Lagerkvist, Carl Johan & Rabinowicz, Ewa, 2013. "Agricultural Credit Market Institutions: A Comparison of Selected European Countries," Factor Markets Working Papers 143, Centre for European Policy Studies.
    3. Curtiss, Jarmila, 2012. "Determinants of Financial Capital Use: Review of theories and implications for rural businesses," Factor Markets Working Papers 123, Centre for European Policy Studies.
    4. Ron Weber & Oliver Musshoff, 2012. "Is agricultural microcredit really more risky? Evidence from Tanzania," Agricultural Finance Review, Emerald Group Publishing, vol. 72(3), pages 416-435, September.
    5. Hedman Jansson, Kristina & Huisman, Chelsey Jo & Lagerkvist, Carl Johan & Rabinowicz, Ewa, 2013. "Agricultural Credit Market Institutions: A Comparison of Selected European Countries," Working Papers 144003, Factor Markets, Centre for European Policy Studies.
    6. Swinnen, Johan F. M. & Gow, Hamish R., 1999. "Agricultural credit problems and policies during the transition to a market economy in Central and Eastern Europe," Food Policy, Elsevier, vol. 24(1), pages 21-47, February.
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