Overview

Persistent overborrowing in Israeli cooperative agriculture led to a severe financial crisis in 1986. The overborrowing may have been caused by the moral-hazard behavior and horizon problems inherent to cooperative organizations. The possible link between cooperative attributes and financial performance is tested by examining the behavior of agricultural cooperatives in two culturally different environments (the U.S. and Israel) and by comparing the performance of cooperatives to that of investor-owned firms (IOFs). Israeli agricultural cooperatives appear to have consistently followed a much riskier financial strategy than comparable U.S. cooperatives. Even if the financial crisis in Israel was indeed precipitated by cooperative-specific factors, these factors are not universally active: their relevance is largely a function of the cultural and economic environment.

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9781540891532

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Zvi Lerman is Professor Emeritus of Agricultural Economics at the Hebrew University of Jerusalem. Since 1991 his research has focused on land reform and farm restructuring in transition economies, including agricultural cooperatives and rural cooperation. His research findings have been widely published in journals, books, and conferences. He has contributed as a consultant to the development of new laws on cooperatives in post-Soviet Central Asia. His recent book Agricultural Cooperatives in Transition Countries is also available from Amazon.com and other online retailers.

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