Abstract: This study examines the hypothesis that cooperatives suffer from a shortage of equity capital because of ownership structure and nonmarketability of cooperative equity. The empirical findings indicate that agricultural cooperatives finance nearly half of their growth with equity. Contrary to theoretical expectations, the equity financing proportion of cooperatives is found to be statistically indistinguishable from the national average of nonfinancial corporations for 1973-1983, and is higher than the national average since 1984. Cooperatives are observed to raise new debt mainly through short-term borrowing. This indicates that banks may be reluctant to give long-term loans to cooperatives because of their "unorthodox" ownership structure

Source: Review of Agricultural Economics, Vol. 15, No. 3 (Sep., 1993), pp. 431-441
Published by: Blackwell Publishing on behalf of Agricultural & Applied Economics Association