Financial structure and cooperative efficiency: A <i>pecking‐order</i> evidence from sugarcane farmers in Eswatini
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agriculturesocioeconomicCreator:
KuhAbd
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Abstract 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.
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