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The effects of capital constraints on the growth of agricultural cooperatives

Author

Listed:
  • Meng-Fen Yen

    (Center for Research in Econometric Theory and Applications, National Taiwan University, Taipei, Taiwan)

  • Mario J. Miranda

    (Department of Agricultural, Environmental and Development Economics, The Ohio State University, Columbus, OH, USA)

  • Ani Katchova

    (Department of Agricultural, Environmental and Development Economics, The Ohio State University, Columbus, OH, USA)

Abstract

In this paper, we examine how capital constraints affect the growth of US agricultural cooperatives. Employing a panel data set obtained from CoBank on 669 US agricultural cooperatives over 5 years, we employ system-generalised method of moments to estimate models of cooperative growth that incorporate long-term debt, allocated reserves, and retained earnings as continuous measures of capital constraints. We find that long-term debt use and size have positive impacts on cooperative growth, in violation of Gibrat's law, which posits that firm size and firm growth are independent. In particular, cash flow, unallocated equity and long-term debt financing are critical contributors to asset growth for small and medium-sized cooperatives.

Suggested Citation

  • Meng-Fen Yen & Mario J. Miranda & Ani Katchova, 2020. "The effects of capital constraints on the growth of agricultural cooperatives," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 66(1), pages 27-33.
    • Handle: RePEc:caa:jnlage:v:66:y:2020:i:1:id:151-2019-agricecon
    DOI: 10.17221/151/2019-AGRICECON
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