This article demonstrates that normality test procedures that include individual detrending of short-term panel data can severely reduce the power of normality tests and strongly bias normality tests in a Type II direction. An alternative error component implicit detrending procedure is suggested that demonstrates higher power for the distributions examined. Both procedures are applied to a large data set with normality of yield residuals being rejected. Assuming normality is shown to reduce potential premium rates for a large number of producers in an existing crop insurance product. Copyright 2003, Oxford University Press.
At sales out breeding bulls, prospective buyers have strong incentives to undertake presale measurement activities. To reduce these transaction costs, sellers often provide information on sale bulls. We examine the information content of two measures of the expected performance of the bulls and find that within a given herd, older, simpler measures of performance contain more information about prices (from buyers' perspectives) than newer, more sophisticated measures known as expected progeny differences, or EPDs. We also find, however, that buyers appear to pay considerable attention to annual changes in herd-average EPD values when comparing animals from different sellers. Copyright 2001, Oxford University Press.
Success in intermediate economics and agricultural economics classes with respect to course prerequisites was evaluated. Prerequisites were statistically important for both intermediate microeconomics and in two of the three agricultural economics courses evaluated. The primaryfinding was that-for three of the four courses evaluated-the higher the proportion of students who completed the listed prerequisite, ceteris paribus, the lower the grade for any given student.Results also indicate that students with higher ex ante GPAs, and to some extent higher math equivalent SAT scores, received higher grades.
Purpose
The safety and soundness of financial institutions has become a leading worldwide issue because of the recent global financial crisis. Historically, financial crises have occurred approximately every 20 years. The worst financial crisis in the last 75 years occurred in 2008–2009. US regulatory efforts with respect to capital reserve requirements are likely to have several unintended consequences for the agricultural lending sector—especially for smaller, less-diversified (and often, rural agricultural) lenders. The paper discusses these issues.
Design/methodology/approach
Simulation models and value-at-risk (VaR) criteria are used to evaluate the impact of capital reserve requirements on lending return on equity. In addition, simulations are used to calculate the effects of loan numbers and portfolio diversification on capital reserve requirements.
Findings
This paper illustrates that increasing capital reserve requirements reduces lending return on equity. Furthermore, increases in the number of loans and portfolio diversification reduce capital reserve requirements.
Research limitations/implications
The simulation methods are a simplification of complex lending practices and VaR calculations. Lenders use these and other procedures for managing capital reserves than those modeled in this paper.
Practical implications
Smaller lending institutions will be pressured to increase loan sector diversification. In addition, traditional agricultural lenders will likely be under increased pressure to diversify portfolios. Because agricultural loan losses have relatively low correlations with other sectors, traditional agricultural lenders can expect increased competition for agricultural loans from non-traditional agricultural lenders.
Originality/value
This paper is novel in that the authors illustrate how lender capital requirements change in response to loan payment correlations both within and across lending sectors.
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