Premium
Financial structure and cooperative efficiency: A pecking‐order evidence from sugarcane farmers in Eswatini
Author(s) -
Mnisi Kuhle Prudence,
Alhassan Abdul Latif
Publication year - 2021
Publication title -
annals of public and cooperative economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.526
H-Index - 37
eISSN - 1467-8292
pISSN - 1370-4788
DOI - 10.1111/apce.12295
Subject(s) - pecking order , inefficiency , order (exchange) , finance , economics , stochastic frontier analysis , financial structure , revenue , capital structure , business , microeconomics , debt , biology , evolutionary biology , production (economics)
This study examines the effect of financial structure on technical efficiency of sugarcane farmer cooperatives (FCs) in Eswatini. Using annual data on 114 FCs from 2014 to 2017, the paper employs the one‐step Stochastic Frontier Analysis technique to estimate technical inefficiency and its determinants. The results indicate that the sugarcane FCs operate with high level of technical efficiency, averaging 85.48%. While all sources of financing were observed to improve technical efficiency, the effects were observed to follow a ‘pecking‐order’, with the greatest effect observed from internal revenue followed by grants and loans. The implications of the findings for financing decisions of FCs in emerging economies are discussed.