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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, Foundation for the European Review of Agricultural Economics, 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. 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.
    2. 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, EconWPA.
    3. 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.
    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.

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