The cost of risky debt in cooperatives
Document Type
Article
Publication Title
Journal of Cooperatives
Abstract
This article values the debt of an input cooperative that procures a single commodity from farmers and then processes and markets the output, and an otherwise identical firm structured as an investor-owned firm (IOF) using the Black-Scholes option pricing model. The major conclusion of this article is that a cooperative can be designed to be safer for lenders, which implies a lower cost of debt, than an otherwise identical firm structured as an IOF. This conclusion is a logical consequence of the difference between the residual claims of the owners of cooperatives and of IOFs.
Publication Date
1-4-2011
Publisher
Kansas State University, The Arthur Capper Cooperative Center (ACCC)
Volume
Vol.25
Recommended Citation
Srinivasan, R, "The cost of risky debt in cooperatives" (2011). Faculty Publications. 793.
https://research.iimb.ac.in/fac_pubs/793
