Changes in Debt Patterns and Financial Structure of Farm Businesses: A Double Hurdle Approach
This paper uses a double hurdle model to help explain one aspect of the changing capital structure of U.S. production agriculture--the increase in the number of debt free farms. Our findings suggest that nonfinancial factors, such as operator age, region, risk aversion, and financial factors such as debt service ability and the cost of capital play significant roles in distinguishing borrowers from non borrowers.
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