IDEAS home Printed from https://ideas.repec.org/a/taf/jsustf/v8y2018i1p1-25.html
   My bibliography  Save this article

Time for new financing instruments? A market-oriented framework to finance environmentally friendly practices in EU agriculture

Author

Listed:
  • Marco Migliorelli
  • Philippe Dessertine

Abstract

We observe that the actual system of support to agriculture in Europe neglects many of the existing and potential interactions in the financing chain and, for this reason, remains scarcely participated in by institutional investors. In an attempt to overcome this issue, this paper provides a theoretical framework for a market-oriented financing of agriculture in the EU, with particular emphasis on environmentally friendly practices. In more detail, the paper identifies the conditions for implementing a comprehensive originate-and-distribute securitisation mechanism for environmental loans backed by a general public guarantee. The discussion provided allows the identification of the main gaps between the target financing infrastructure and the instruments currently available in the market. In this respect, two elements would deserve a specific implementation. First, an integrated policy programme able to leverage the public spending though a balance of grants (which should support only unprofitable environmentally friendly practices) and external credit enhancer in the securitisation mechanism. Second, a specialised data set able to provide reliable environmental and financial performance indicators on different environmentally friendly investments to farmers, intermediaries and institutional investors.

Suggested Citation

  • Marco Migliorelli & Philippe Dessertine, 2018. "Time for new financing instruments? A market-oriented framework to finance environmentally friendly practices in EU agriculture," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 8(1), pages 1-25, January.
  • Handle: RePEc:taf:jsustf:v:8:y:2018:i:1:p:1-25
    DOI: 10.1080/20430795.2017.1376270
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/20430795.2017.1376270
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1080/20430795.2017.1376270?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Berger, Allen N. & Klapper, Leora F. & Udell, Gregory F., 2001. "The ability of banks to lend to informationally opaque small businesses," Journal of Banking & Finance, Elsevier, vol. 25(12), pages 2127-2167, December.
    2. Rösch, Daniel & Scheule, Harald, 2012. "Capital incentives and adequacy for securitizations," Journal of Banking & Finance, Elsevier, vol. 36(3), pages 733-748.
    3. de la Torre, Augusto & Martínez Pería, María Soledad & Schmukler, Sergio L., 2010. "Bank involvement with SMEs: Beyond relationship lending," Journal of Banking & Finance, Elsevier, vol. 34(9), pages 2280-2293, September.
    4. repec:bla:annpce:v:85:y:2014:i:4:p:683-684 is not listed on IDEAS
    5. Keys, Benjamin J. & Mukherjee, Tanmoy & Seru, Amit & Vig, Vikrant, 2009. "Financial regulation and securitization: Evidence from subprime loans," Journal of Monetary Economics, Elsevier, vol. 56(5), pages 700-720, July.
    6. Affinito, Massimiliano & Tagliaferri, Edoardo, 2010. "Why do (or did?) banks securitize their loans? Evidence from Italy," Journal of Financial Stability, Elsevier, vol. 6(4), pages 189-202, December.
    7. Maria Espinosa‐Goded & Jesús Barreiro‐Hurlé & Eric Ruto, 2010. "What Do Farmers Want From Agri‐Environmental Scheme Design? A Choice Experiment Approach," Journal of Agricultural Economics, Wiley Blackwell, vol. 61(2), pages 259-273, June.
    8. Jiménez, Gabriel & Salas, Vicente & Saurina, Jesús, 2009. "Organizational distance and use of collateral for business loans," Journal of Banking & Finance, Elsevier, vol. 33(2), pages 234-243, February.
    9. Latacz-Lohmann, Uwe & Schulz, Norbert & Breustedt, Gunnar, 2014. "Assessing Farmers' Willingness to Accept "Greening": Insights from a Discrete Choice Experiment in Gremany," 88th Annual Conference, April 9-11, 2014, AgroParisTech, Paris, France 170560, Agricultural Economics Society.
    10. Ricardo J. Caballero & Arvind Krishnamurthy, 2009. "Global Imbalances and Financial Fragility," American Economic Review, American Economic Association, vol. 99(2), pages 584-588, May.
    11. Berger, Allen N. & Udell, Gregory F., 2006. "A more complete conceptual framework for SME finance," Journal of Banking & Finance, Elsevier, vol. 30(11), pages 2945-2966, November.
    12. Berger, Allen N & Udell, Gregory F, 1995. "Relationship Lending and Lines of Credit in Small Firm Finance," The Journal of Business, University of Chicago Press, vol. 68(3), pages 351-381, July.
    13. Christine A. Parlour & Guillaume Plantin, 2008. "Loan Sales and Relationship Banking," Journal of Finance, American Finance Association, vol. 63(3), pages 1291-1314, June.
    14. Atif Mian & Amir Sufi, 2009. "The Consequences of Mortgage Credit Expansion: Evidence from the U.S. Mortgage Default Crisis," The Quarterly Journal of Economics, Oxford University Press, vol. 124(4), pages 1449-1496.
    15. Rob Fraser, 2002. "Moral Hazard and Risk Management in Agri‐environmental Policy," Journal of Agricultural Economics, Wiley Blackwell, vol. 53(3), pages 475-487, November.
    16. Cardone-Riportella, Clara & Samaniego-Medina, Reyes & Trujillo-Ponce, Antonio, 2010. "What drives bank securitisation? The Spanish experience," Journal of Banking & Finance, Elsevier, vol. 34(11), pages 2639-2651, November.
    17. Allen N. Berger & Gregory F. Udell, 2002. "Small Business Credit Availability and Relationship Lending: The Importance of Bank Organisational Structure," Economic Journal, Royal Economic Society, vol. 112(477), pages 32-53, February.
    18. Bellucci, Andrea & Borisov, Alexander & Zazzaro, Alberto, 2013. "Do banks price discriminate spatially? Evidence from small business lending in local credit markets," Journal of Banking & Finance, Elsevier, vol. 37(11), pages 4183-4197.
    19. Giovanni Dell’ariccia & Deniz Igan & Luc Laeven, 2012. "Credit Booms and Lending Standards: Evidence from the Subprime Mortgage Market," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 44, pages 367-384, March.
    20. Atif Mian, 2006. "Distance Constraints: The Limits of Foreign Lending in Poor Economies," Journal of Finance, American Finance Association, vol. 61(3), pages 1465-1505, June.
    21. Norbert Schulz & Gunnar Breustedt & Uwe Latacz-Lohmann, 2014. "Assessing Farmers' Willingness to Accept “Greening”: Insights from a Discrete Choice Experiment in Germany," Journal of Agricultural Economics, Wiley Blackwell, vol. 65(1), pages 26-48, January.
    22. Rob Fraser, 2012. "Moral Hazard, Targeting and Contract Duration in Agri‐Environmental Policy," Journal of Agricultural Economics, Wiley Blackwell, vol. 63(1), pages 56-64, February.
    23. Allen, Franklin & Carletti, Elena, 2006. "Credit risk transfer and contagion," Journal of Monetary Economics, Elsevier, vol. 53(1), pages 89-111, January.
    24. Fabio Bartolini & Vittorio Gallerani & Meri Raggi & Davide Viaggi, 2012. "Modelling the Linkages between Cross-Compliance and Agri-Environmental Schemes Under Asymmetric Information," Journal of Agricultural Economics, Wiley Blackwell, vol. 63(2), pages 310-330, June.
    25. Jos Bijman & Constantine Iliopoulos, 2014. "Farmers' Cooperatives in the Eu: Policies, Strategies, and Organization," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 85(4), pages 497-508, December.
    26. Pennacchi, George G, 1988. " Loan Sales and the Cost of Bank Capital," Journal of Finance, American Finance Association, vol. 43(2), pages 375-396, June.
    27. Altunbas, Yener & Gambacorta, Leonardo & Marques-Ibanez, David, 2009. "Securitisation and the bank lending channel," European Economic Review, Elsevier, vol. 53(8), pages 996-1009, November.
    28. Darrell Duffie, 2008. "Innovations in credit risk transfer: implications for financial stability," BIS Working Papers 255, Bank for International Settlements.
    29. Caroline Gijselinck & Matthias Bussels, 2014. "Farmers' Cooperatives in Europe: Social and Historical Determinants of Cooperative Membership in Agriculture," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 85(4), pages 509-530, December.
    30. Elena Loutskina & Philip E. Strahan, 2009. "Securitization and the Declining Impact of Bank Finance on Loan Supply: Evidence from Mortgage Originations," Journal of Finance, American Finance Association, vol. 64(2), pages 861-889, April.
    31. Marco MIGLIORELLI & Sandro BRUNELLI, 2017. "The Transmission Of The Monetary Policy In The Euro Area: The Role Of The Banks Business Model," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 88(3), pages 303-322, September.
    32. Gorton, Gary B. & Pennacchi, George G., 1995. "Banks and loan sales Marketing nonmarketable assets," Journal of Monetary Economics, Elsevier, vol. 35(3), pages 389-411, June.
    33. Liu, Ming-Hua & Margaritis, Dimitris & Tourani-Rad, Alireza, 2011. "Asymmetric information and price competition in small business lending," Journal of Banking & Finance, Elsevier, vol. 35(9), pages 2189-2196, September.
    34. Jeremy C. Stein, 2002. "Information Production and Capital Allocation: Decentralized versus Hierarchical Firms," Journal of Finance, American Finance Association, vol. 57(5), pages 1891-1921, October.
    35. Benjamin J. Keys & Tanmoy Mukherjee & Amit Seru & Vikrant Vig, 2010. "Did Securitization Lead to Lax Screening? Evidence from Subprime Loans," The Quarterly Journal of Economics, Oxford University Press, vol. 125(1), pages 307-362.
    36. Ahn, Jung-Hyun & Breton, Régis, 2014. "Securitization, competition and monitoring," Journal of Banking & Finance, Elsevier, vol. 40(C), pages 195-210.
    37. Farruggio, Christian & Uhde, André, 2015. "Determinants of loan securitization in European banking," Journal of Banking & Finance, Elsevier, vol. 56(C), pages 12-27.
    38. Boot, Arnoud W. A., 2000. "Relationship Banking: What Do We Know?," Journal of Financial Intermediation, Elsevier, vol. 9(1), pages 7-25, January.
    39. Ferri, Giovanni & Kalmi, Panu & Kerola, Eeva, 2014. "Does bank ownership affect lending behavior? Evidence from the Euro area," Journal of Banking & Finance, Elsevier, vol. 48(C), pages 194-209.
    40. Nicolai V. Kuminoff & Ada Wossink, 2010. "Why Isn’t More US Farmland Organic?," Journal of Agricultural Economics, Wiley Blackwell, vol. 61(2), pages 240-258, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Agnieszka Brelik & Barbara Golebiewska & Justyna Franc-Dabrowska, 2020. "Co-Financing of Organic Farming in the EU: Necessity or Fantasy?," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 547-557.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Marco Migliorelli & Philippe Dessertine, 2017. "Time for new financing instruments? A market-oriented framework to finance environmentally friendly practices in EU agriculture," Post-Print halshs-02103991, HAL.
    2. Deku, Solomon Y. & Kara, Alper & Zhou, Yifan, 2019. "Securitization, bank behaviour and financial stability: A systematic review of the recent empirical literature," International Review of Financial Analysis, Elsevier, vol. 61(C), pages 245-254.
    3. Davide Castellani, 2018. "Mortgage†backed Securitization and SME Lending During the Financial and Economic Crisis: Evidence from the Italian Cooperative Banking System," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 47(1), pages 187-222, February.
    4. Fabio Panetta & Alberto Franco Pozzolo, 2018. "Why do banks securitise their assets? Bank-level evidence from over one hundred countries in the pre-crisis period," Temi di discussione (Economic working papers) 1183, Bank of Italy, Economic Research and International Relations Area.
    5. Kara, Alper & Marques-Ibanez, David & Ongena, Steven, 2016. "Securitization and lending standards: Evidence from the European wholesale loan market," Journal of Financial Stability, Elsevier, vol. 26(C), pages 107-127.
    6. Affinito, Massimiliano & Tagliaferri, Edoardo, 2010. "Why do (or did?) banks securitize their loans? Evidence from Italy," Journal of Financial Stability, Elsevier, vol. 6(4), pages 189-202, December.
    7. Ongena, Steven & Kara, Alper & Marqués-Ibáñez, David, 2011. "Securitization and lending standards: evidence from the wholesale loan market," Working Paper Series 1362, European Central Bank.
    8. Chen, Zhizhen & Liu, Frank Hong & Opong, Kwaku & Zhou, Mingming, 2017. "Short-term safety or long-term failure? Empirical evidence of the impact of securitization on bank risk," Journal of International Money and Finance, Elsevier, vol. 72(C), pages 48-74.
    9. Deku, Solomon Y. & Kara, Alper & Marqués-Ibáñez, David, 2019. "Do reputable issuers provide better-quality securitizations?," Working Paper Series 2236, European Central Bank.
    10. Albertazzi, Ugo & Eramo, Ginette & Gambacorta, Leonardo & Salleo, Carmelo, 2015. "Asymmetric information in securitization: An empirical assessment," Journal of Monetary Economics, Elsevier, vol. 71(C), pages 33-49.
    11. Sascha Tobias Wengerek & Benjamin Hippert & André Uhde, 2019. "Risk allocation through securitization - Evidence from non-performing loans," Working Papers Dissertations 58, Paderborn University, Faculty of Business Administration and Economics.
    12. Thorsten Beck & Vasso Ioannidou & Larissa Schäfer, 2018. "Foreigners vs. Natives: Bank Lending Technologies and Loan Pricing," Management Science, INFORMS, vol. 64(8), pages 3792-3820, August.
    13. Alper Kara & David Marques-Ibanez & Steven Ongena, 2015. "Securitization and Credit Quality," Working Papers 15013, Bangor Business School, Prifysgol Bangor University (Cymru / Wales).
    14. José María Liberti & Mitchell A. Petersen, 2018. "Information: Hard and Soft," NBER Working Papers 25075, National Bureau of Economic Research, Inc.
    15. Beck, Thorsten & Degryse, Hans & De Haas, Ralph & van Horen, Neeltje, 2018. "When arm's length is too far: Relationship banking over the credit cycle," Journal of Financial Economics, Elsevier, vol. 127(1), pages 174-196.
    16. Hakenes, Hendrik & Schnabel, Isabel, 2010. "Credit risk transfer and bank competition," Journal of Financial Intermediation, Elsevier, vol. 19(3), pages 308-332, July.
    17. Patir, Assaf, 2017. "Securitization, bank vigilance, leverage and sudden stops," MPRA Paper 81463, University Library of Munich, Germany.
    18. Li, Zhe & Sun, Jianfei, 2011. "Bank competition, securitization and risky investment," MPRA Paper 34173, University Library of Munich, Germany.
    19. Berger, Allen N. & Black, Lamont K., 2011. "Bank size, lending technologies, and small business finance," Journal of Banking & Finance, Elsevier, vol. 35(3), pages 724-735, March.
    20. Di Gong & Shiwei Hu & Jenny Ligthart, 2015. "Does Corporate Income Taxation Affect Securitization? Evidence from OECD Banks," Journal of Financial Services Research, Springer;Western Finance Association, vol. 48(3), pages 193-213, December.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:jsustf:v:8:y:2018:i:1:p:1-25. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://www.tandfonline.com/TSFI20 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/TSFI20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.