Journal of Economics and Finance

, Volume 17, Issue 2, pp 93–108 | Cite as

The consequences of mutually secured debts: The case of Israeli moshavim

  • Amnon Levy


This paper explores the long-run consequences of the farm’s own debt and the moshav’s average debt on the farm household investment in productive capital stock, borrowing and consumption. In particular, the analysis focuses on the financial externalities that might arise from the moshav’s organizational principle of mutual responsibility for members’ debts. These externalities can have a considerable adverse effect on the capital stock and borrowing of the more efficient farms, and hence on their productive activity. These effects are studied within the framework of an optimal control model and summarized by a number of optimality conditions. The effects of the individual member’s position and the moshav’s financial position on the individual member’s investment and borrowing are estimated and tested in two cross-section regression analyses, which also take into account observed variations in characteristics among the family farms.


Capital Stock Family Farm Individual Farm Productive Capital Mutual Responsibility 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Berck, Peter, andAmmon Levy. “The Cost of Equal land Allocation: The Case of Israeli Moshavim.”American Journal of Agricultural Economics 68, (1986): 605–614.CrossRefGoogle Scholar
  2. Haruvi, Nava, andYoav Kislev. “Cooperation in the Moshav.”Journal of Comparative Economics 8 (1984): 54–77.CrossRefGoogle Scholar
  3. Sadan, Ezra, andDov Weintraub. “Ethnicity, Nativity, and Economic Performance of Cooperative Smallholding Farms in Israel.”Economic Development and Cultural Change 28 (1980): 487–507.CrossRefGoogle Scholar
  4. Pratt, John W. “Risk Aversion in the Small and the Large.”Econometrica 32 (1964): 122–136.CrossRefGoogle Scholar
  5. Just, Richard E., David Zilberman, andEithan Hochman. “Estimation of Multicrop Production Functions.”American Journal of Agricultural Economics 65 (1983): 770–779.CrossRefGoogle Scholar
  6. Hochman, Eithan, Oded Hochman, andAsaf Razin. “Demand for Investment in Productive and Financial Capital.”European Economic Review 4 (1973): 67–83.CrossRefGoogle Scholar
  7. Zusman, Pinchas. “Collective Choice, Pareto Optimality and the Organisation of Cooperatives—The Case of Agricultural Credit Associations.”Journal of Economic Behavior and Organization 4 (1983): 183–204.CrossRefGoogle Scholar
  8. Zusman, Pinchas.Individual Behaviour and Social Choice in a Cooperative Settlement: The Theory and Practice of the Israeli Moshav. The Magnes Press, The Hebrew University at Jerusalem, 1988.Google Scholar

Copyright information

© Springer 1993

Authors and Affiliations

  • Amnon Levy
    • 1
    • 2
  1. 1.University of WollongongAustralia
  2. 2.Department of EconomicsBen-Gurion UniversityBeer-ShevaIsrael

Personalised recommendations