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An Analysis of Two Alternative Funding Sources for Northeast Banks Lending to Agriculture

Published online by Cambridge University Press:  10 May 2017

Kenneth Carraro  and
Eddy LaDue
Kenneth Carraro
Affiliation:
Federal Reserve Bank of St. Louis
Eddy LaDue
Affiliation:
Department of Agricultural Economics, Cornell University
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Abstract

A survey of agricultural banks in New York State found that inability to compete with the low interest rates offered by the Farm Credit Service (FCS) rather than the unavailability of funds per se was limiting agricultural lending by commercial banks. A MASI-like intermediary would (1) be of assistance only to banks unable to use loan participations and with high CD costs and (2) would likely require a large multistate area to be feasible. Only eight percent of the New York banks serving agriculture qualify for FICB funding. Further, FICB funding would be profitable only if banks experienced illiquidity at least 50 percent of the time.

Type
Research Article
Information
Northeastern Journal of Agricultural and Resource Economics , Volume 14 , Issue 1 , April 1985 , pp. 78 - 87
Copyright
Copyright © 1985 Northeastern Agricultural and Resource Economics Association 

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References

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