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The Farm Credit System as a Government-Sponsored Enterprise

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  • Farrell E. Jensen

Abstract

This article examines the impact of government-sponsored enterprise status for the Farm Credit System on allocative efficiency in agricultural credit markets. The Farm Credit System was established originally to overcome market failures in these markets and to provide long-term funding at rates lower than private credit sources. Using a supply and demand model and an options model,the impact of subsidized interest rates is discussed. My results show that the default risk premium in interest rates is transferred from agricultural borrowers to taxpayers. There is evidence of deadweight losses and market distortions due to government-sponsored enterprise status for the Farm Credit System.

Suggested Citation

  • Farrell E. Jensen, 2000. "The Farm Credit System as a Government-Sponsored Enterprise," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 22(2), pages 326-335.
    • Handle: RePEc:oup:revage:v:22:y:2000:i:2:p:326-335.
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    File URL: http://hdl.handle.net/10.1111/1058-7195.00025
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    Cited by:

    1. Gregory McKee & Albert Kagan, 2019. "The differential impact of the Dodd–Frank Act on niche non-metro lenders," Journal of Banking Regulation, Palgrave Macmillan, vol. 20(4), pages 291-301, December.
    2. Jennifer Ifft & Todd H. Kuethe & Gregory Lyons & Alexander Schultz & John Y. Zhu, 2024. "Crop insurance's impact on commercial bank loan volumes: Theory and evidence," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 46(1), pages 318-337, March.
    3. Regmi, Madhav & Featherstone, Allen Merril, 2018. "Differential Taxation In Agricultural Credit Market," 2018 Annual Meeting, February 2-6, 2018, Jacksonville, Florida 266692, Southern Agricultural Economics Association.
    4. Gao YUANDONG & Wen TAO & Yi WEN & Wang XIAOHUA, 2013. "A spatial econometric study on effects of fiscal and financial supports for agriculture in China," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 59(7), pages 315-332.
    5. Ai, Tianyuan & Zhang, Jiashu & Shao, Jingwen, 2023. "Study on the coordinated poverty reduction effect of agricultural insurance and agricultural credit and its regional differences in China," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 835-844.
    6. Aidan R. Vining & David L. Weimer, 2016. "The challenges of fractionalized property rights in public‐private hybrid organizations: The good, the bad, and the ugly," Regulation & Governance, John Wiley & Sons, vol. 10(2), pages 161-178, June.
    7. Zhenhai Xiang & Pengfei Ban & Qifeng Yuan, 2020. "Measurement of the Income Difference of Rural Residents in Peri-Urbanized Areas and Its Influencing Factors: Evidence from Nanhai, Foshan, China," Sustainability, MDPI, vol. 12(20), pages 1-21, October.
    8. Extension Faculty & Staff, 2011. "New York Economic Handbook, 2012," EB Series 121630, Cornell University, Department of Applied Economics and Management.
    9. Turvey, Calum G. & Ifft, Jennifer E. & Carduner, Amy, 2018. "The historical relationship between the U.S. Farm Credit System, Farm Service Agency and commercial bank lending," 2018 Annual Meeting, August 5-7, Washington, D.C. 274120, Agricultural and Applied Economics Association.
    10. Chad Fiechter & Todd Kuethe & David B. Oppedahl, 2021. "Perceived Competition in Agricultural Lending: Stylized Facts and an Agenda for Future Research," Working Paper Series WP-2021-16, Federal Reserve Bank of Chicago.
    11. Hueth, Brent M. & Hutchins, Jared, 2018. "Production Credit Associations and Agricultural Productivity Change in the United States, 1920-1940," 2018 Annual Meeting, August 5-7, Washington, D.C. 274384, Agricultural and Applied Economics Association.

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