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Performance Indicators in Agricultural Financial Markets

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  • Jansson, Kristina Hedman
  • Lagerkvist, Carl Johan

Abstract

This study attempts to develop performance indicators for the financial markets based on the findings in an earlier Factor Markets Working Paper (No. 33, “Agricultural credit market institutions: A comparison of selected European countries”) and on FADN (Farm Accountancy Data Network) data. Two indicators were developed. One measured the long-term economic sustainability of agricultural firms since the financial characteristics of the firms were perceived as important factors when rejecting a loan applicant. If the indicator works, it should show that a low value in this indicator is related to the performance in the financial markets. The second indicator was the loan-to-value (LTV), or debt-to-asset ratio, the reasoning behind this indicator is that low values can point to credit constraints, and in WP 33 we saw that the interviewed experts expected LTVs to be much higher than what is actually the case. We find that the first indicator can’t be used to measure the performance of the financial institutions, since we can’t show any relationship between the indicator and activities in the financial markets. However, the indicator is valuable for its measurement of the long-term financial sustainability of the agricultural sector, or of the firms. The loan-to-value indicator does imply that most countries would have room to increase the credit.

Suggested Citation

  • Jansson, Kristina Hedman & Lagerkvist, Carl Johan, 2013. "Performance Indicators in Agricultural Financial Markets," Working papers 155701, Factor Markets, Centre for European Policy Studies.
    • Handle: RePEc:ags:famawp:155701
    DOI: 10.22004/ag.econ.155701
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    References listed on IDEAS

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    3. Hedman Jansson, Kristina & Huisman Chelsey, Jo & Lagerkvist, Carl Johan & Rabinowicz, Ewa, 2013. "Agricultural Credit Market Institutions: A Comparison of Selected European Countries," Factor Markets Working Papers 143, Centre for European Policy Studies.
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    5. Ron Weber & Oliver Musshoff, 2012. "Is agricultural microcredit really more risky? Evidence from Tanzania," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 72(3), pages 416-435, November.
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    Keywords

    Agricultural Finance;

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