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Demand for Financial Assets in the Farm Sector: A Portfolio Balance Approach

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  • John B. Penson

Abstract

The demand for financial assets in portfolios of farm business-household units is viewed as a problem of maximization of utility derived from pecuniary and nonpecuniary services provided by portfolio components and unused credit reserves. The statistical model provides simultaneous equations estimates of structural demand equations for commercial bank deposits. Yields on equities, marketable government bonds, and time and savings deposits as well as the service charge rate on demand deposits are shown to be important determinants of demand. The speed of adjustment of actual stocks to desired levels was estimated and comparisons were made with published estimates for other sectors.

Suggested Citation

  • John B. Penson, 1972. "Demand for Financial Assets in the Farm Sector: A Portfolio Balance Approach," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 54(2), pages 163-174.
    • Handle: RePEc:oup:ajagec:v:54:y:1972:i:2:p:163-174.
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    File URL: http://hdl.handle.net/10.2307/1238698
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    Citations

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    Cited by:

    1. Musser, Wesley N. & White, Fred C. & McKissick, John C., 1977. "An Analysis of Optimal Farm Capital Structure," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 9(1), pages 163-168, July.
    2. Penson, John B., Jr., 1977. "External Finance: A Necessary Component In Growth Projections For Southern Agriculture," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 9(1), pages 1-9, July.
    3. Hughes, Dean W. & Penson Jr., John B. & Bednarz, Curtis R., 1984. "Subsidized Credit And Investment In Agriculture: The Special Case Of Farm Real Estate," 1984 Annual Meeting, August 5-8, Ithaca, New York 279062, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. Penson, John B. & Taylor, C. Robert, 1990. "Modeling the Interface Between Agriculture and the General Economy," Working Papers 258042, Texas A&M University, Agricultural and Food Policy Center.
    5. Colclough, William G. & Lange, Mark D., 1985. "Portfolio Changes In The U.S. Farm Sector," 1985 Annual Meeting, August 4-7, Ames, Iowa 278533, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Gustafson, Cole R. & Chama, Sydney L., 1992. "Savings and Investments of North Dakota Farmers," Agricultural Economics Miscellaneous Reports 51171, North Dakota State University, Department of Agribusiness and Applied Economics.
    7. Andersson, Hans & Ramaswami, Bharat & Moss, Charles B. & Erickson, Kenneth W. & Hallahan, Charles B. & Nehring, Richard F., 2005. "Off-farm Income and Risky Investments: What Happens to Farm and Nonfarm Assets?," 2005 Annual meeting, July 24-27, Providence, RI 19480, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    8. Penson, John B. & Chen, Dean T., 1988. "Design and Application of a Structural General Equilibrium Model to Farm Policy Analysis," Staff Reports 257926, Texas A&M University, Agricultural and Food Policy Center.

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