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David Leatham's Research

My primary research focus is on improving financial decision making for agricultural businesses including farms and ranches. The optimal portfolio of assets (investment decisions), and the optimal portfolio of short-term credit, long-term credit and owner’s equity to finance assets (capital structure decisions) are important business decisions. The outcome of investment and capital structure decisions is dependent on future events; thus, time and uncertainty must be considered. Much of this research is done in a risk/return framework where optimal decisions depend on an individual's risk/return preference.

My secondary focus is on improving the ability of financial intermediaries to provide credit TO agricultural businesses (agricultural credit). Specifically, this work centers on 1) designing and evaluating financial derivatives that can be used by agricultural lenders to manage interest rate risk, 2) improving credit assessment models, and 3) assessing the impact of deregulation and structural changes on agricultural lender’s ability and willingness to provide credit to agricultural firms. Funding support has been received from the Texas Agricultural Experiment Station, College of Agriculture and Life Science Organized Research Development funds, American Bankers Association, University Minigrant Program, Farm Credit Banks of Texas, Farm Credit Council, and National Crop Insurance Services.

Click on the links below to view the abstract. Some of the most recent include links to the full article.

"Aggregate business failures and macroeconomic conditions: A VAR look at the U.S. between 1980 and 2004." Journal of Applied Economics, 16 (no.1, May 2013): 179-202.

"Consumer Preferences for Potted Orchids in the Hawaiian Market." HortTechnology, 20 (no.1, 2010): 239-44.

"Structural Change in Stock Price Volatility in Asian Financial Markets." Journal of Economic Research, 15 (2010): 1-27.

"Irrigation technology adoption and its implication for water conservation in the Texas High Plains: a real options approach." Agricultural Economics, 38 (2008): 47-55.

"REITs' dynamics under structural change with unknown break points." Journal of Housing Economics, 16 (2007): 37-58.

"Does Consumer Debt Cause Economic Recession? Evidence Using Directed Acyclic Graphs." Applied Economics Letters, 13 (2006): 401-407.

"Effects of Federal Risk Management Programs on Optimal Acreage Allocation and Nitrogen Use in a Texas Cotton-Sorghum System." Journal of Agricultural & Applied Economics, 37(Number 3, December 2005): 685-99.

"Futures Trading Activity and Commodity Cash Price Volatility." Journal of Business Finance & Accounting, 32 (No. 1 & 2, January/March 2005), 0306-686X.

"Price and Volatility Transmission in International Wheat Futures Markets." Annals of Economics and Finance, 4 (2003):37-50.

"Stock Market Reaction to Food Recalls: A GARCH Application."Applied Economic Letters, 9 (2002):979-87.

"External Equity in Agriculture: Risk Sharing and Incentives in a Principal-Agent Relationship." Agricultural Finance Review, 62 (No. 1, Spring 2002):13-24.

"Agricultural Liberalization Policy and Commodity Price Volatility: A GARCH Application."Applied Economics Letters, 8 (2001):593-98.

"Currency Convertibility and Linkage between Chinese Official and Swap Market Exchange Rates." Contemporary Economic Policy, 19 (No. 3,2001):347-59. (T.K. Ann Outstanding Paper Award in International Trade)

"Asset Storability and Price Discovery of Commodity Futures Markets: A New Look." Journal of Futures Markets, 21 (No. 3, 2001):279-300.

"Impact of Interest Rate Swaps on Corporate Capital Structure: An Empirical Investigation." Applied Financial Economics, 11 (2001):75-81.

"The Law of One Price: Developed and Developing Country Market Integration." Journal of Agricultural and Applied Economics, 32 (2000):429-40.

"Price Discovery in Wheat Futures Markets." Journal of Agricultural and Applied Economics, 31 (No. 2, August 1999): 359-370.

"The Effects of Department Operating Budget Reductions on Systemwide Agribusiness Operations." Agricultural Finance Review, (1998) 58:63-80.

"Market Efficiency of US Grain Markets--An Application of Cointegration Tests." Agribusiness, 14 (No. 2, 1998): 107-112.

"Impact of the 1996 FAIR Act on Major Agricultural Input Suppliers" Agricultural Finance Review, (1997) 57:53-66.

"Overview of Financial Derivatives Used by Financial Intermediaries: Some Implications for Financing Agriculture" Proceedings of Regional Committee NC-2, (September 8-9, 1997) 11-24.

"The Use of Financial Derivatives in Agriculture and an Annotated Bibliography" Unpublished, (1997).

"Factors Affecting Commercial Bank Lending to Agriculture." Journal of Agricultural and Applied Economics, 27 (July, 1995): 112-126.

"External Equity Financing in Agriculture Via Profit and Loss Sharing Contracts." Agribusiness, 11 (No. 3, May/June 1995):223-233.

"Application of Mathematical Programming Techniques in Credit Scoring of Agricultural Loans." Agricultural Finance Review, (1995) 55:74-88.

"The Value of Planting Flexibility Provisions in the 1990 Farm Bill to Three Representative Texas Farms." Journal of Agricultural and Applied Economics, 26 (July, 1994):148-157.

"The Effects of Holding Nonfarm Related Financial Assets On Risk-Adjusted Farm Income." Journal of Agricultural and Applied Economics, 26 (December, 1994):565-579.

"Seasonal Effects on Income Over Feed and Replacement Costs." Journal of Dairy Science, 76 (1993):1678-1692.

"Texas Water Quality Laws." Journal of Dairy Science, 75(1992):2846-2856.

"Profit and Loss Sharing in Agriculture-An Application of Islamic Banking." Western Agricultural Economics Association, Papers of the 1992 Annual Meeting, Colorado Springs, Colorado (July 12-15, 1992): 471-477.

"Nonfarm Equity Capital Financing of Production Agriculture." Agricultural Finance Review, 49 (1989): 112-126.

"An Empirical Analysis of Strip&Rollover Interest Rate Hedging." Agricultural Finance Review, 49 (1989): 112-126.

"Transition in Agriculture- A Strategic Assessment of Agriculture and Banking." Agribusiness, 4 (No. 2, 1988): 157-165.

"How Farm Loan Characteristics Differ Among Lenders." Journal of the American Society of Farm Managers and Rural Appraisers, 52 (No. 1, April 1988): 83-90.

"Farmers' Choice of Fixed and Adjustable Interst Rate Loans." American Journal of Agricultural Economics, (November 1988): 803-812.

"Assessing the Comparative Economics of a Biotechnology: Artificial Insemination Dairy Sires." Agribusiness, 3 (No. 2, 1987): 207-220.

"Implications of Crop Insurance For Farmers and Lenders." Southern Journal of Agricultural Economics, (December 1987): 113-120.

"Farm Survival and Performance under Alternative Financial Conditions and Credit Policies." Agribusiness, 2 (No.3, 1986): 321-337.

"Effects of Planning Horizon and Conception Rate on Profit-Maximizing Selection of Artificial Insemination Sires."Journal of Dairy Science, 68 (1985): 2295-2302.

"Floating Versus Fixed-Rate Loans in Agriculture: Effects on Borrowers, Lenders, and the Agriculture Sector." American Journal of Agricultural Economics, 66 (No. 5, December 1984): 607-613.

"Empirical Estimates of the Effects of Inflation On Salvage Values, Cost and Optimal Replacement of Tractors and Combines." North Central Journal of Agricultural Economics, 3 (No. 2, July 1981): 111-117.

"Interest Rates Charged and Amounts Loaned by Major Farm Real Estate Lenders." Agricultural Economics Research, 30 (No. 2, April 1978): 1-9.